Record Debt Figures: Almighty Crash on the Cards

1.21.08pm BST (GMT +0100) Tue 29th Jul 2003

New figures from the Bank of England show that lending to individuals grew by record levels in June. The £10bn growth in extra lending to individuals is made up of £7.8bn in mortgage lending and £2.2bn in consumer credit lending - much higher than expected by analysts.

Vincent Cable MP, Liberal Democrat Shadow DTI Secretary, said: "An almighty crash is on the cards. Debt is soaring far above income. People are going to have to pay this back at some stage."

"With growth in the economy almost non-existent, people are going to regret being so wanton with their wallets."

"With debt levels so high, a slight downturn in the economy could lead to negative equity, repossessions and record levels of bankruptcy."

"Aggressive lenders must be reigned and the public need to be aware of the dangers of running on empty."

ENDS

NOTES TO EDITORS:

Vincent Cable revealed last week that that average household debt has grown by over 50% since 1997. In contrast, average household income has grown by only 23%. Average annual household debt now outstrips average annual income by 30%. In 1997, average annual household debt was only 5% higher than average annual income.

Year Average Annual Household Debt £ Average Annual Household Income £

% Debt Higher Than Income

1997 24,500 23,400 4.7

2002 37,500 28,800 30.2

Growth % 53 23