UK Debt Hindering Economic Recovery

Tue, 08 Sep 2009

The level of personal debt among Britons is preventing the UK from returning to growth as quickly as other European nations, it has been claimed.

According to insolvency trade body R3, the level of UK debt that exists remains a significant stumbling block to economic recovery, despite the fact that public spending has decreased by £600 million.

Peter Sargent, president of R3, said: "Other European economies like France and Germany may well be coming out of the recession already and appear to be recovering fairly rapidly but the UK economy could be left behind."

"One of the reasons for this is because of the amount of debt we are carrying, it's like a ball and chain around our ankles."

He explained that in order for the UK economy to recover from the economic downturn on a similar timescale to its European counterparts, Britons need to stop borrowing money and start paying off their existing debts, starting with the most expensive one (the one with the highest interest rate ).

"What seems to be happening is that people are borrowing on their credit cards and paying off mortgages, which is wrong because credit card debt costs more to service," he added.

Last month the Bank of England revealed that credit card lending in the UK increased by a net £100 million in July.
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