Brits Top European Debt Table
It’s been said time and time again, but Brits are now borrowing more than at any time before. Collectively, as a nation, we now over £1.2 trillion! Which means that we in the UK now borrow double the European average and sit very comfortably at the top of the European debt table.
“Ahh”, you may be saying, “but houses cost more here.” That may be true, but at £216 billion for the year, even unsecured (non-mortgage) lending hit record highs for 2005. In fact, in the unsecured lending debt table we now borrow more than a third of all non-mortgage borrowings in Europe!
However, while it appears that Brits have an “insatiable appetite for credit”, rising interest rates and overall reductions in credit card debts over the last month or so clearly show that the UK debt market has reached its saturation point. Not only can we not possibly borrow any more money, but we cannot afford to borrow any more money.
So, although we Brits may borrow more over the coming Christmas and New Year holiday period, Economic indicators do appear to show that in 2007 we will be more conservative with our credit card spending and will try to reduce the pain of interest rate rises by paying off some of our more expensive unsecured debts.
Europe, on the other hand, may be a different matter. Excluding Germany and France, many of the European countries credit market are very underdeveloped and immature. It is highly likely that, in the hunt for profits, UK lenders will look to our European cousins in the coming year.
While all of this may bode well for us in the UK, and while constant reminders that we need to become a nation of savers, the message may well come as too little too late. As well as being top of the European debt table, signs that we Brits are having trouble repaying the huge sums we have borrowed over the last two decades are showing in that more and more elderly people in the UK are now having to find part-time work in their retirement to help make their mortgage repayments. Recent survey reports show that as many as 30% of recently retired old age pensioner in the UK are now working part-time to meet their credit and debt repayments. Which goes along way to show that any money borrowed in haste will take many years to repay.
Richard Smith
3rd October 2006
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