1 September 2008
Total personal debt among UK consumers has exceeded national income for the second consecutive year, according to the accountants Grant Thornton. Its research shows that total outstanding consumer debt built up on mortgages, secured loans, personal loans and credit cards is at a higher level than gross domestic product (GDP). UK consumers now owe £1,444 billion, while GDP stands at £1,410, according to the latest available data, Grant Thornton found. Stephen Gifford, chief economist at the firm, said there is "no cause for panic" because most of this debt is secured on dwellings, which means it is "perfectly serviceable". However, he warned: "If the property market and economy continue to weaken, the current levels of personal debt will become unsustainable and there will be a marked increase in personal insolvencies." His comments come as figures from the Bank of England reveal that July saw a £3.2 million increase in net lending through secured loans.