This is, in the main, being caused by the ever increasing tidal wave of debt that is sweeping the country in addition to growing unemployment. Recent research shows personal debt is increasing in the UK by £1 million every four minutes – this is a terrifying state of affairs and has the capacity to severely undermine the economic balance in the UK. Of course we are led to believe the unsecured credit boom is being used to fund consumer spending on items ranging from ipods to holidays, and this is true. However, recent credit card spending has been used to fund the ever-increasing cost of living. Consumers are now borrowing to fund a normal lifestyle and, in some cases, borrowing on credit cards to fund healthcare and to pay normal living costs such as increasing energy bills and community tax.
Unemployment is also raising its ugly head, with the latest figures showing there are now 1.65 million unemployed in the UK.
The latest Base Rate rise should serve as a reminder to all of us that the time has come to put our finances in order and the first thing to do is to reduce unsecured debt. The previous housing slide showed that the consumers who had not over-extended themselves with too much credit were able to bear the burden of mortgage rates over 15 per cent. This does not look like happening this time around and one or two small rate increases by the Bank of England will not harm us. Having too much debt and not being covered for redundancy is, I believe, asking for trouble.
Mike Fitzgerald
Sales director
Brentchase Financial Services
