Britons 'go back to borrowing'

Thursday, 01 April 2010 09:47

By myfinances.co.uk staff

Hopes that the shock of the recession may have improved people's financial habits have been dented after new research showed that saving levels suffered a "sharp fall" last year as Britons returned to borrowing.

Statistics compiled by Unbiased.co.uk show that at the end of 2008, consumers were working hard to pay off their debt, with £1.68 being repaid for every pound saved.

By the first quarter of 2009, this had changed to 13 pence being borrowed for every pound saved and by the final three months the year, it had risen to 62 pence being borrowed for every pound saved.

Over the course of last year as a whole, Britons took on a "staggering" £28.2 billion in non-mortgage debt, the site said.

It added that the savings culture sparked by the recession appears to have been short-lived, with the amount Britons put aside for a rainy day almost halving from £113.4 billion in 2008 to £71.6 billion in 2009.

Karen Barrett, Unbiased.co.uk chief executive, said that the initial shock of the credit crunch appears to have "failed to affect long-term borrowing and savings habits".

According to Credit Action, average household debt in the UK including mortgages was £58,083 in February.

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