Britons Repaying Debt At Record Rate

Tue, 01 Dec 2009

British consumers repaid their debts at the fastest rate on record in October, according to new figures from the Bank of England .

Data released on Monday revealed that consumers reduced their outstanding credit card, loan and overdraft debt by £579m last month - repaid the highest amount of unsecured credit on record in October, the biggest fall since Bank of England records began in 1993.

The drop in outstanding consumer credit was the fourth monthly decline in a row, exceeding September's £299m net repayment and nearly three times bigger than economists had expected for the month.

Since July, when credit levels first started to fall after a decade of rising personal debt, UK consumers have repaid over £1.3 billion of unsecured debt, highlighting the growing desire for many Brits to reduce or clear their debts .

However, economists have warned that the slowdown in spending will not help the economy recover.

Howard Archer, chief economist at Global Insight, said: "In the long term it is probably a good thing because consumer debt levels are a major concern and consumers need to get their personal finance into better shape."

"The problem is the economy is battling to get out of recession and it needs consumer spending to get it out."
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