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Warning Over £1trillion Mountain Of Debt

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Its actually closer to £1.1 trillion now an increase of around 10% in the past year, its all going to end in tears.

Daily Mail Sept 16 - IMF Warning over £1trillion mountain of debt

Warning over £1trillion mountain of debt

Edmund Conway and Becky Barrow, Daily Mail

16 September 2005

BRITAIN'S £1trillion personal debt mountain may be starting to fall apart with dire consequences for millions of households, the International Monetary Fund warned yesterday.

They rose by 37% to 11,195 between April and June compared to the same period last year, according to government figures.

The IMF's experts said that if the increase in bankruptcies continued, it would be a serious threat to the UK economy.

Their warning is made all the more chilling because the IMF rarely singles out one country in its report pinpointing the biggest threats to the global economy. This means that its decision to focus on Britain is even more worrying.

The report said that households in many countries are in severe debt, but only in the UK has this resulted in more 'delinquencies' - its term for bankruptcies and debt defaults. It warned of 'some potential vulnerability in household balance sheets' - in other words, millions are spending more than they are earning.

In its closely-watched Financial Stability Report, the IMF said this could be an early sign that the £1trillion owed by British families - which includes mortgages - is at last proving too heavy a burden to bear.

With banks, including Lloyds TSB and Royal Bank of Scotland, making provisions of £ 3billion for possible bad debts in the coming year, the IMF's experts said Britain's debt problem shows little sign of improving.

Numbers of bankruptcies in England and Wales have soared in recent years as more people are unable to cope with their debts. The IMF report follows a recent warning from the Bank of England about dangerously high levels of credit card debt. Some banks are continuing to lend money at steep rates of interest, it said in its economic survey.

Indebted families will suffer and the knockon effects could drag share prices down and even push the country close to recession. The IMF warned that the average family's debt is one and a half times what they earn in a year.

A debt advice charity warned recently that a typical caller to its advice line has debts of nearly £29,000, 15 per cent higher than last year.

The Consumer Credit Counselling Service said that most callers are couples in their midthirties with children and a mortgage who have debts from at least ten different sources, including a number of credit cards.

Steve Cullen, a debt specialist at the Citizens' Advice Bureau, said: 'Four or five years ago, I would have been astonished to help someone with £100,000 debt. Now it is commonplace.'

He expressed frustration that credit card companies appear to have no scruples about handing out cards to heavily indebted customers.

The unsecured debt mountain - which includes credit card borrowing, loans and overdrafts - has soared to £190billion, according to the Bank of England. This translates to £3,200 for every person in Britain, including children.

As debt-hit consumers have tightened their belts there has been a dramatic fall in high street spending, causing misery for retailers. Figures from the Office for National Statistics yesterday show retail sales in August were the lowest for almost a decade.

Edited by Riser

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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