The Bank of England (the country’s central bank) has announced that borrowing on credit cards, loans and overdrafts is growing at its fastest rate since the 2008/09 financial crisis. According to the Bank of England, unsecured consumer credit was up 8.3% in the 12 months prior to November 2015 and as a result the level of outstanding consumer credit has risen to £178 ($260) billion.
Commenting on the news, Joanna Elson, the chief executive of the Money Advice Trust (a charity that raises awareness about the consequences of debt) said,
“Increased borrowing is to be expected in an economy that is recovering – but such steep rises in recent months are a cause for concern. Many households will be able to handle this extra borrowing – but many will not, and we are expecting an increase in debt problems in the new year as a result.”
While there are some positives to consumer debt rising as it is a result of increased consumer confidence in the economy for example, unsecured consumer debt should always be monitored closely as any potential economic downturn in the future could lead to consumers missing payments and bringing the UK economy back to a state that followed the 2008/2009 crisis.
Overview by Tristan Hugo-Webb, Associate Director, Global Payments Advisory Service at Mercator Advisory Group
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