Nations Consumer Debt Overtakes GDP For First Time

Fri, 24 Aug 2007

Consumer debt in the UK has exceeded the amount of money generated by the economy (GDP) for the first time, triggering fears that the country could become "technically bankrupt" .

A study by financial advisers Grant Thornton revealed that Britons owe a staggering £1.34 trillion (£1,345 billion) in mortgages and unsecured debt, which tops this year’s expected GDP of £1.3 trillion, according to the most up-to-date figures.

These figures were even more concerning, given that just a decade ago the UK's GDP by late August was enough to cover all outstanding consumer debt .

Consultancy firm Grant Thornton, which calculated the figures, said it would take until January 5, 2008 to generate enough to exceed the current mountain of debt .

Stephen Gifford, chief economist at Grant Thornton, commented: "Most consumer debt is secured and can be repaid over several years, otherwise we would be technically bankrupt ."

"Britain's huge level of consumer debt is symptomatic of the country's well established buy-now-pay-later culture."

"We can no longer generate enough yearly GDP to cover the amount we owe, and we need next year's income to cover this year's debts," he added.

Meanwhile, Citizens Advice, which helps people with money difficulties, says it expects debt inquiries to exceed benefit inquiries for the first time.

Figures from a new report from financial website MoneyExpert.com found that around 7 per cent of the British public (roughly 2.5m people) are ‘very concerned’ about their ability to manage their debts.

The survey showed that a quarter of all consumers have increased their debt over the last three months, with around one in 14 increasing their borrowing by a 20 per cent or more.
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