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Consumers return to borrowing ways

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The dark days of penny-pinching during a vicious and universal recession may have been quickly forgotten by the majority of UK consumers, as research shows Britons are borrowing 62p for every pound saved.

By the end of 2008, consumers were much more debt conscious, repaying £1.68 worth of debt for every pound saved, according to Unbiased.co.uk. But an abandonment of saving has seen Britain’s debt problems start to spiral, and current trends look set to continue throughout 2010.

“While we may be officially out of recession, these latest figures highlight that consumers are back behaving as they did before the onset of the credit crunch, even though the economy is still not back to full strength,” commented Unbiased.co.uk’s Chief Executive, Karen Barrett.

“The credit crunch appeared to have a dramatic ‘shock’ effect on the public, who were jolted into paying off their debts, but it appears this has failed to affect long-term borrowing and savings habits. There is no indication that we will see an improvement of financial behaviour in 2010.”

Overall in 2009, Brits borrowed a staggering £28.2 billion worth of non-mortgage debt. This is a stark contrast to the £39.3 billion which was repaid during 2008. The hopes of the recession kick-starting a savings culture have also been short-lived, as savings levels have almost halved during 2009, with only £71.6 billion being horded, compared to a massive £113.4 billion in 2008.

Overall savings levels also appear to be decreasing year on year, with £144.9 billion of new savings in 2007, falling to £113.4bn in 2008 and £71.6bn in 2009. This spells out a concern for future financial health unless consumers seek advice.

“While many believe we are over the worst, there is still a lot of consumer confusion out there right now, and it is vital people seek professional advice from an IFA to enable them to strike the best balance between borrowing, saving and other aspects of their finances throughout these difficult times,” added Mrs Barrett.

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Written by Andrew Hodges

April 3, 2010 at 3:16 pm

Posted in Comment, LinkedIn

Tagged with ,

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