2011 may see higher rates of struggle in regards to debt, expert says

There may be more Britons faced with the last resort option of paying for basic living expenses through the use of debt financing, either personal lending or credit card purchases, in the coming year, one expert warns.

In a recent statement issued by Ed Bowsher, conumer finance head for website lovemoney.com, he warned that debt per household for the entirety of the UK could increase by a significant factor in 2011, which could lead to such measures as taking out lines of credit or raiding their savings accounts in an effort to stay afloat in regards to financial responsibilities.

Mr Bowsher commented that there would be a higher incidence of people in the UK failing to pay back any lending they may have received in the past due to increased interest rates, leading to an increase in the insolvency rate and other related financial emergencies.

The economic forecast for the entirety of the coming year is not a pleasant one, as the UK is continuing its efforts to recover from one of the worst global financial crises ever. ┬áThe Bank of England has been holding down interest rates at an historically low 0.5 per cent for the past eighteen months, and inflation is currently at 3.2 per cent, significantly higher than the government’s 2 per cent target. ┬áThis has led to a devaluation of many savings accounts in the UK as interest rates cannot keep pace with the deterioration caused by inflation.

Based on the current economic climate, Mr Bowsher added that the possibility of banking institutions increasing their rate of writing off larger amounts of debt throughout 2011.

Mr Bowsher’s recent warnings come hot on the heels of national money regulation charity Credit Action’s recently released report on current UK Debt Statistics, in which it was demonstrated that there was an 0.8 per cent rise in the amount of personal funds owed in the UK from July of last year through July 2010.

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