Britain swings back to borrowing

Monday, 14 September 2009 12:00

Brits are now turning back to borrowing and easing back on saving.

As the recession hit, people looked to clear debts and increase savings, however this trend is quickly reversing.

Research by unbiased.co.uk points to £5.54 billion being borrowed over repayment, not including mortgages, in the second quarter of 2009 - compared to £2.92 billion in the first three months of the year.

In the second half of 2008, £68.1 billion more was paid off from debts than borrowed.

This represents a major swing back to debt.

As a result, the UK is borrowing 26p for each £1 saved. In the second half of 2009, we were repaying £1.61 of debt for every £1 saved.

David Elms, chief executive of Unbiased, said: "The financial turmoil of 2008 prompted a dramatic retreat from savings in favour of repaying personal debt.

"The first half of 2009, in contrast, has seen consumers head back down the debt path as they shift back into borrowing."

He added: "However, it is encouraging to see that Brits are beginning to save again, despite the low interest rate environment."

In the second quarter of 2009, Britons saved £21.1 billion, compared to £14.0 billion in the first half.

Mr Elms went on to explain as consumers are hit by a "deluge of contradictory reports on the economy in the media" it was vital for anyone with financial concerns to seek professional advice from an independent financial adviser.

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