Bank of England Reports Sharp Rise in UK Consumer Debt Level

January 7, 2016

The Bank of England has reported that there was a sharp rise in overall consumer borrowing levels around the UK in the weeks prior to Christmas and the festive period.

In fact, the bank’s latest figures show that borrowing via credit cards, overdraft facilities and loans rose in recent weeks at the sharpest pace since the financial crisis of 2008.

British consumers were apparently particularly willing to borrow money and head into the red as the festive period approached, with a £1.5 billion increase in overall consumer debt recorded in November 2015.

This increase represents the sharpest such rise since February 2008 and a greater than normal monthly rise, with the overall consumer debt figure typically increasing by around £1.2 billion each month.

The collective scale of consumer borrowing across the UK also increased by as much as 8.3 per cent over the course of the 12 months prior to November 2015, according to the bank.

While a greater appetite for borrowing among consumers can be taken as a sign of improving confidence in the state of the economy, there are also concerns that many individuals and households may be in the process of overstretching themselves financially and relying too much on credit cards and loans.

“If credit balances continue to increase at this rate into the New Year then concerns about a new and possibly unsustainable credit boom will grow,” Peter Tutton, head of policy at the debt charity group StepChange, said in a statement.

“With many households becoming more vulnerable to income shocks, this could result in a whole new group of people struggling with debt.”

“Increased borrowing is to be expected in an economy that is recovering – but such steep rises in recent months are a cause for concern,” said Joanna Elson, chief executive of the Money Advice Trust, in response to the Bank of England’s latest figures.

“Many households will be able to handle this extra borrowing – but many will not, and we are expecting an increase in debt problems in the new year as a result,” she said.

If you live anywhere in Scotland and you’re concerned about your ability to cope financially at the moment then Scotland Debt Solutions can help provide advice and guidance you may need. Call us today to arrange a free consultation.