High Levels of Consumer Debt
| "Although consumer spending has been strong, it has been financed by record levels of consumer borrowing. UK consumers have about £1.168 trillion in outstanding debt, 83% of which is in the form of mortgages. This means that many consumers have high levels of debt and therefore would be badly affected if interest rates needed to rise. Even a small rise in interest rates would increase their costs of borrowing and therefore could cause a downturn in spending in the future. If Oil prices continue to rise this may cause cost push inflation and therefore the bank of England may have to raise interest rates. Therefore the high levels of consumer debt are a potential problem. Also high levels of consumer spending have led to a deterioration in the current account deficit."
Sources: http://news.bbc.co.uk/1/hi/business/4761854.stm http://www.economicshelp.org/uk_economy/ukeconomy2006.html WikiWealth needs your help. How does this discussion…
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