The total debt burden accumulated by the UK on credit cards, homeowner loan deals, overdrafts and mortgages has outstripped the national output for the first time.
While the combined revenues of business and industry increased by 1.8 per cent last year to £1,127 billion, private debt increased by ten per cent to a total £1,158 billion.
While the massive figure has begun to have a negative effect on the national economy, depressing consumer spending, banking profits have soared.
The “big five” high street banks are expected to report a 15 per cent rise in profits to £35 billion when they report their annual figures in a few weeks.
Keith Tondeur, of financial awareness organisation Credit Action, said that the latest figures are “another in a list of alarming milestones”.
“British families are carrying two-thirds of the credit card debt of the whole of Europe. Bankruptcies and repossessions are soaring,” he told the Daily Mail.
Some experts have claimed that rising house prices have made people’s paper wealth expand, meaning that the debt burden is sustainable.
Mr Tondeur warned that this safety net would be lost if the property market received a knock of unemployment rises.
“We are seeing significant numbers with unsecured debts of £30,000,” he said. “That generates interest of £300 to £400 a month. Who on earth can afford that?”
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