UK household debt looks set to rise

Fri, 28 Oct 2011

Household debt in the UK looks set to rise after new figures revealed the financial wellbeing of consumers has suffered a significant decline.

Alliance Trust's UK Financial Reality Index dipped from 79.6 to 56.7 across quarter three of 2011 - the largest fall ever recorded.

The movement means the marker is currently at its lowest level since the end of 2008 and suggests increasing debt troubles could be just around the corner for many Britons.

Linsey Thomson, senior economic analyst at the Alliance Trust Research Centre - which produces an array of statistics and investigational work every month - noted the findings underline just how tough conditions are at present for households throughout the UK.

The industry figure said: "Higher inflation continues to cause higher basic goods prices and a loss of real spending power which is hitting household budgets."

A slowdown in economic activity coupled with a rise in unemployment could be making the likelihood of debt more realistic for many.

Ms Thomson added the combination of these factors shows consumer spending could slow further in the months ahead.
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