IMF warns of UK credit addiction

07/10/2009

The International Monetary Fund has warned that people in Britain are falling in love with consumer credit once again, despite the current economic climate.

According to a report in the Daily Mail, the IMF predicts there will be a surge of 2.4 per cent in UK consumer debt next year, compared to a rise of 1.7 per cent in the eurozone and a 2 per cent fall in the US.

The UK's love affair with credit will see it top the European league for defaults in the four years from 2007 to 2010, the IMF predicts.

More than 15.5 per cent of consumer loans will be made up of what the IMF calls sour debt, which is second only to 17.4 per cent level in the US, while the mortgage default rate will be 3 per cent here and 7.7 per cent in America.

At its recent annual meeting, the IMF warned that there will be an overall drop of 1.5 per cent drop in consumer loans in the UK this year, however, 2010 will see a 2.4 per cent rise.

Mortgage lending meanwhile will decline at a slower rate, with a 0.6 per cent drop predicted this year, which will fall to 0.4 per cent next year.

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