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As savings levels plunge new research suggests Brits are rushing to repay debts due to the threat of a double dip recession.
The trend of reverting back to repaying more debt than consumers are borrowing was last seen in the last quarter 2008 just prior the recession according to unbiased.co.uk.
Figures show Brits have repaid £1 billion over and above what they were borrowing over the second quarter of this year, equating to repaying 7p of debt for every pound saved. This is compared to the final quarter of last year where Brits added £16 billion to the debt mountain as they instead borrowed 66p for every pound saved.
Savings levels in contrast have dropped dramatically, falling by nearly £8 billion over the second quarter of 2010 compared to £23 billion to £15 billion in the first quarter.
“Brits appear to have shifted their financial habits to reflect those last seen at the height of the credit crunch, with debt repayment top of the priority list,” said Karen Barrett, unbiased.co.uk chief executive.
“For the first time since 2008, consumers are now paying off more debt than they’re borrowing – however this has inevitably also resulted in a drop in savings levels.”
Earlier this month, research from insolvency trade body R3 revealed the extent of the Nation’s debt problem when it published figures showing that 900,000 Brits are struggling with debt on their own.
Despite the impact that the recession and subsequent burgeoning unemployment have had on the population, the report indicated that there are a number of barriers that prevent people from seeking out debt advice. In fact, some 44 per cent of people thought their problems were not serious enough to talk to a professional, while 16 per cent believed they were only in a short-term fix.
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