Consumer Debt Rising in the UK

Studies and media reports from the UK indicate that personal debt is on the rise across the United Kingdom. In fact, for the second consecutive year, consumer debt from credit spending has exceeded the United Kingdom’s Grosse Domestic Product, or total wealth generated. This means that United Kingdom consumers are spending more than they are borrowing. If it continues it can not only cause consumers personal financial problems, but it may lead to a further weakening of the nation’s economy and ability to continue borrowing money.

The specific types spending sited for creating the current crisis for UK consumers are mortgages, loans and credit card debt. These debts along with the global financial crisis hitting the same industries have been to blame for creating the crisis.

Even with the current credit lending crisis United Kingdom consumers brought their spending on credit to £1,444 billion in the year 2008, which is a number 7.3% percent higher than it was in 2007. This is bad news for the United Kingdom’s economy which has seen slowed growth in the recent hard economic times that still have an unknown degree of effect on markets and economies worldwide, and could leave UK consumers struggling to paying back their credit debts in the future.

While financial experts in the United Kingdom are saying that there is no reason for panic, they do say that things may get worse before they get better. They also point out that over the last ten years the number of consumers with personal insolvency issues has been on the rise and that trend will probably continue. However, some experts have calculated that personal debt is rising at a rate of £1,000,000 per minute. At the moment however, personal insolvency figures for consumers in the United Kingdom are staggering. The increase seen over ten years shows figures going from 24,000 in 1997 to 100,000 in 2007 and these numbers are expected to continue to rise.

There are hopes for the future when the global crisis calms and the national economy begins to stabilize. The stability of personal financial recovery will be found lagging behind that of the national economy, just as the consumer financial problems became evident only after the national issues.

How and when the current crisis in the United Kingdom will be resolved is a matter of speculation, with experts still in disagreement over the details. What is certain is that UK consumers will need to be careful about their credit spending for the foreseeable future or the United Kingdom may face a longer recovery than is expected or necessary.