James Moore: Banks pay their debts but beware the consequences

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Outlook It's payback time. Quite literally.

Consumers bear some nasty scars from the financial crisis but they appear to have learned the right lessons from them. According to the latest figures from the British Bankers Association, they are paying back their debts.

This will have consequences, for the economy in particular. A retail- led recovery is not going to happen and a high street that has grown fat on the cheap credit shoppers have been lavishing on, it is going to have to adapt to a chill new reality. That will put a brake on an important part of the economy, but it will have beneficial effects too.

With no pricing power, shops will have to keep prices low as they battle for what business there is out there. So inflation needn't take hold, which is good, because despite yesterday's figures, the level of Britain's consumer debt remains unsustainably high.

With so many people still struggling under borrowing burdens, the consequences of rising interest rates could be very nasty indeed. It is just as important for personal budget deficits to be addressed as it is the national deficit.