The level of reliance on debt to make ends meet has climbed to worrying levels. Consumers borrowed more money in the run up to Christmas than in any month since February 2008, at the height of the credit crunch woes.
The Bank of England's Money and Credit report for November reveals that the amount of cash being borrowed by consumers ahead of Christmas climbed by £1.5bn. The report shows that in November consumers owed a total of £178.2 billion on credit cards and loans.
The figures raised fresh concerns about a new and possibly unsustainable credit boom.
Peter Tutton, Head of Policy at StepChange Debt Charity, said: "With many households becoming more vulnerable to income shocks, this could result in a whole new group of people struggling with debt.
"We must not see a return to pre-recession levels of unmanageable debt and it is vital that creditors are lending responsibly to help prevent this.”
He urged the Government to ensure the right help is available for anyone who falls into financial difficulty.
Joanna Elson, chief executive of the Money Advice Trust, the charity that runs National Debtline, echoed the concerns. She said: "The figures confirm that we need to keep a watchful eye on the huge growth in consumer credit we are now seeing. Increased borrowing is to be expected in an economy that is recovering – but such steep rises in borrowing in recent months are a cause for concern.”
She warned that many households will not be able to handle the extra borrowing and that he charity is expecting an increase in debt problems in the New Year as a result. “Our research shows that nearly six million Britons are likely to fall behind on their finances this month, after a Christmas that more than one in three put on credit,” she said.Reuse content