With bankruptcy the amount of people filing for bankruptcy rising at a phenomenal rate, Britons should be extra cautious. According to recent figures, the average British household is said to be almost £60 0000 in debt.
With this shocking new figure, experts have warned UK residents to take heed and be more cautious when it comes to buying on credit, and taking out loans. But despite stricter conditions on lending, average Britons are now suffering the after effects of years of relatively cheap borrowing.
UK consumer debt has increased dramatically in the past few years, including credit cards, loans, and mortgages. This figure has increased by 7.3% over the past year, from £1.346 billion in June 2007, to the current £1.44 billion.
There are approximately 25 million households in the UK, which means that every household faces an average debt of £58,461.
Stephen Gifford, chief economist at Grant Thornton, said that this figures highlight the ever growing financial problems facing UK residents. A major concern is the possible increase of insolvencies and personal debt if the property market and economy continues to weaken. This could have a disastrous effect on personal finances.
He added, ‘UK economic growth has chugged along quite nicely thanks to the rising consumer spending which has largely been on credit. While most of the debt is perfect serviceable and secured on dwellings, the rising number of insolvencies and repossessions is testament to this process having a negative outcome for an increasing number of individuals’.
Grant Thornton said that this number is likely to increase in the next 6 to 12 months.