Britain’s borrowing hits £1 trillion

by Sandra Haurant and Agencies

British consumers borrowed at a rate of around £1m every four minutes in June, getting themselves £11.23bn deeper in debt and taking the total amount of borrowing to more than £1 trillion, the Bank of England said today.

The total covers a combination of mortgages, personal loans, overdrafts, hire purchase agreements and on credit and store cards.

British household debt is now equal to the total amount owed by Africa, Asia and Latin America to international banks and through loans from other countries.

A combination of low interest rates, making borrowing cheap, soaring house prices and low unemployment, have boosted people’s confidence in the economy and encouraged people to spend on credit.

But consumer groups and MPs have warned that people could be storing up problems for the future, with rising interest rates making debts unmanageable.

The National Consumer Council said around six million families were already struggling to keep up with credit repayments, and hikes in the cost of borrowing could lead to more people facing problems.

Citizens Advice said it had seen a 44% increase in the number of people coming to it for help with debt in the past six years.

Teresa Perchard, Citizens Advice director of social policy, said: "We have been warning for some time now that personal debt problems threaten to overwhelm large numbers of people in this country, with potentially devastating consequences.

"The ever-increasing growth in consumer borrowing will almost certainly lead to problems for a record number of people, who will face more serious debt problems than ever before.

http://money.guardian.co.uk/creditanddebt/debt/story/0,1456,1271575,00.html?=rss