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Consumer Debt Level Beats Uk Output

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Couldn't see this on the news blog, but thought it worth drawing people's attention to.

Consumer debt level beats UK output

By Edmund Conway, Economics Editor (Filed: 13/02/2006)

Debts taken on by British families have overtaken the size of the economy for the first time. People have borrowed so much their total debt outstripped Britain's gross domestic product over the new year

Debts taken on by British families have overtaken the size of the economy for the first time. People have borrowed so much their total debt outstripped Britain's gross domestic product over the new year.

The landmark came barely 18 months after British household debt passed £1 trillion, and came as bankruptcies have soared to record levels.

It will cause consternation at the Bank of England, which last week voted to leave interest rates at 4½pc.

Simon Rubinsohn, chief economist at Gerrard, said this was an "economic iceberg" which could threaten UK growth.

"This iceberg may not yet be big enough to damage the ship - we are still well afloat - but remains a massive threat," he said. "Unemployment is beginning to tick up, meaning some people will start to find it that bit harder to pay back their debt.''

Bank Governor Mervyn King will on Wednesday present his latest assessment of the economy in his quarterly Inflation Report. He is expected to cut back the Bank's growth forecasts to reflect the continued slowdown in retail sales.

In a editorial comment on the article, the telegraph says:-

Comment

(Filed: 13/02/2006)

For the first time, even if Britons devoted every penny they generate this year to mortgage and credit card bills, they would not be debt-free come next January. News that household debt has overtaken GDP will not trigger economic disaster. But the only way out of this situation is either sluggish consumer activity for a number of years or a house price crash.

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That's a shocking stat. I also love the bit that says people will 'start to find it that bit harder to pay back their debt' when unemployed. Gosh, do you really think so? It's good to see those three little words at the end of the editiorial too - HPC.. :D

Edited by Badger

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http://www.dailymail.co.uk/pages/dmstandar...d%3D62%26ct%3D5

Stephen Womack, Mail on Sunday

12 February 2006

THE woman on the end of the line sounds scared and vulnerable. She has just had a visit from bailiffs, who called to value her property because she and her husband owe £17,000 after the failure of their business, and suppliers want payment.

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Guest Charlie The Tramp

The Telegraph Article

Simon Rubinsohn, chief economist at Gerrard, said this was an "economic iceberg" which could threaten UK growth.

"This iceberg may not yet be big enough to damage the ship - we are still well afloat - but remains a massive threat," he said. "Unemployment is beginning to tick up, meaning some people will start to find it that bit harder to pay back their debt.''

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That's a shocking stat. I also love the bit that says people will 'start to find it that bit harder to pay back their debt' when unemployed. Gosh, do you really think so? It's good to see those three little words at the end of the editiorial too - HPC.. :D

Totally agree, what a euphenism 'start to find it that bit harder to pay back their debt when unemployed' means in reality, they will find it impossible to pay back their debt without savings to plunder or by flogging assets if they have any. Fraudulantly getting more credit (as they are unemployed) will become more difficult with lenders tightening criteria.

So many folks are in hyper denial of the inability to pay back debts when you lose a job, say you have only a debt of £300 with interest frozen, & pay the minimum of £1 a week (not unreasonable on dole of £55 a week ); Thats 6 years !!

Surely these tough economic times will put folks off taking on debt & mortgages if they wake up to increasing job insecurity.

Its just occured to me that due to identity fraud, a lot of folks must be wrongly credit blacklisted than before, so I assume that the remaining borrowers have taken up the slack slanting the average debt statistics a bit.

Edited by Saving For a Space Ship

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  • 302 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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