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UK credit card spending binge reaches levels reminiscent of the 2008 crash

Published: 05/01/2017 by Comments

UK credit card spending binge reaches levels reminiscent of the 2008 crash

Debt charities have indicated to the Government that unsecured consumer credit is growing at an alarming rate – the highest figures in 11 years, with credit card debts at a record high over the Christmas season.

Theresa May’s government are being warned by debt charities to keep a close eye on growing consumer credit figures.  The most recent figures from the Bank of England reveal that unsecured debt (credit cards, car loans and second mortgages included) saw growth of 10.8 per cent up to November 2016, totalling £192.2 billion.  This figure, when compared to October, shows the most rapid growth in 11 years.

Consumer credit debt in 2008, just before worldwide recession kicked in, saw debt figures spike at £208 billion in the UK.

In November 2016 the proportion of the debt figure attributable to credit card use was £66.7 billion, as larger numbers of shoppers relied on plastic to help get through the season.

The UK debt charity, StepChange, have expressed concern over the rise in debt levels last year.  Head of Policy, Peter Tutton explained,

“levels of outstanding borrowing are approaching the 2008 peak, and the growth rate of net lending is at its highest since 2005. Alarm bells should be ringing.  Previous experience shows how such increases in the levels of borrowing can leave households over-indebted and vulnerable to sudden changes in circumstances and drops in income that can pitch them into hardship. Lenders, regulators and the government need to ensure that the mistakes made in the lead-up to the financial crisis are not repeated and that there are better policies in place to protect those who fall into financial difficulty.”

Joanna Elson, The Chief Executive of the Money Advice Trust, Joanna Elson shares similar concern over the current debt situation, “consumer credit continues to soar, and this is something we should all be concerned about amidst the current uncertainty over the UK economy”.  Elson went on to say, “most people are currently able to handle this extra borrowing, but if the economy does indeed suffer in the years ahead, these extra debts could become even more difficult to repay.”
Reuters have indicated that economic growth is expected at a rate of 1.1 per cent this year – more than half compared to last year, as inflation gets close to 3 per cent, rising from zero at the commencement of 2016. This is due to sterling falling rapidly after June’s Brexit vote.

Household credit card debt rose by £600 million between October and November 2016, sitting at £66.7 billion.  The total consumer credit figure stood at £192.2 billion in November, an increase of £1.9 billion from the previous month.


Colette Lamb
News article by:
Colette Lamb

A business sector writer with over 15 years of experience working in the marketing, commerce and law sectors' internationally and in the UK. Interests include composing music and other creative communications such as art and dance therapy.


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