Leading article: Borrowing can be liberating

When added together, the figures for personal borrowing in the UK are certainly striking. It was calculated last year that total personal debt in Britain has reached £1.13 trillion pounds. That will have risen over the Christmas period. And it is worrying that the Consumer Credit Counselling Service expects bankruptcies to double over the next few years.

But it is important to bear in mind that debt is by no means an inherently bad thing. Indeed, in some instances it can be liberating. Almost everyone these days takes out a mortgage to purchase their home. But a mortgage is merely a loan secured on a property. It is a form of debt - but one that most people consider a good deal. In time, the same will be true of tuition fees. When the system of post-graduation repayment is in place, people will feel no qualms about getting into debt to secure an education. These are things widely considered to be worth borrowing for. And acquiring them opens up opportunities that people would not otherwise have had.

The problem is when people get into debt that they cannot manage. This is particularly the case when they are persuaded to take advantage of enticing deals on store and credit cards. There is no easy solution to this. The Government and the police must clamp down on loan sharks. And banks and shops must be encouraged to lend responsibly.

But, ultimately, a free market is much better than heavy-handed regulation. What we have seen over the past two decades is the democratisation of credit. It is easy to forget at a time when we are besieged with adverts offering us zero per cent credit and buy-now-pay-later deals that women once needed to produce a letter from their husband if they wished to take out a bank loan. The fact that everyone now has equal access to credit is to be welcomed.

It is true that there are economic dangers. A sharp rise in interest rates in our heavily indebted country could make life very difficult. Many would lose their homes and could tip the economy into recession. But there are also significant economic dangers if consumers suddenly cease spending money on the high street. This too could result in a downturn. One danger must be weighed up against the other. And, at a time when interest rates look likely to remain low, our political leaders should be extremely wary of interfering in the credit market.

There will always be those among us who borrow irresponsibly and end up paying a heavy price. But perhaps the more surprising fact, in this era of ultra-accessible credit, is that their numbers are so relatively small.

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