Britons now owe £1 trillion

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The Independent Online

Fears of a property slump rose yesterday as official figures showed consumers had racked up a total of £1 trillion of debt and a leading expert said houses were 30 per cent overvalued.

The total outstanding debt on mortgages, cards, bank loans and overdrafts hit £1,004,290m last month, the Bank of England said. Consumers took on £11.23bn extra debt during June.

Opposition politicians accused the Government of turning a blind eye to the problem. Oliver Letwin, the shadow chancellor, said it had taken 600 years for debt to reach £500bn but just seven years of Labour for it to double to £1 trillion.

But the Treasury said households' debt interest payments were running at half the level of the early 1990s. John Healey, economic secretary to the Treasury, said: "We will take no risks with our hard-won stability."

The National Institute of Economic Social Research, an independent think tank, said house prices were 30 per cent above their sustainable level.