[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Thursday, 29 July, 2004, 07:57 GMT 08:57 UK
UK debt likely to top 1 trillion
A credit card being swiped
Britons are splashing out on credit cards, loans and mortgages
The amount of money owed by consumers is expected to break through the 1 trillion barrier on Thursday.

The Bank of England (BoE) will reveal how much debt consumers have racked up on cards, mortgages, loans and overdrafts in June.

Currently, consumers owe 993bn, just short of the 1 trillion milestone.

Debt charities are warning consumers to think hard about whether they can manage their debt burden if interest rates go up over the next few months.

According to the National Consumer Council, about six million families are already struggling to keep up with credit commitments.

Meanwhile, Citizens Advice has seen a 44% increase in the number of people seeking help for debt problems over the past six years.

"We have been warning for some time now that personal debt problems threaten to overwhelm large numbers of people in this country, with potentially devastating consequences," said Teresa Perchard of Citizens Advice.

The BoE has raised interest rates four times since November, taking the base rate to 4.5%.

Concern growing

The Monetary Policy Committee (MPC), the bank's rate-setting body, meets next week to decide if rates will rise again.

VOTE RESULTS
Are we borrowing too much?
Yes
91%
No
9%
35260 Votes Cast
Results are indicative and may not reflect public opinion

Vote now closed

Concern has been growing that further interest rate hikes could force heavily indebted consumers to the wall.

According to the BoE, about 80% of UK personal debt is in the form of loans secured against dwellings, such as mortgages and re-mortgages.

But the Bank of England's chief economist Charlie Bean yesterday played down concern about the growing debt.

The 1 trillion figure, he said, did not mean UK households were sitting on a "time-bomb", since an increase in borrowing had been matched by an increase in financial assets.

But workers on the debt frontline remain worried about the personal cost of taking on too much debt.

"Interest rates are still at a historically low level and people seem to be managing their repayments," Malcolm Hurlston, founder of debt charity the Consumer Credit Counselling Service (CCCS) told BBC News Online.

"But there are now a trillion reasons why consumers need to stop and think if they can afford their debt burden, particularly if interest rates go up."


WATCH AND LISTEN
The BBC's Evan Davis
"We should be wary about this amount of debt but not panic stricken"



RELATED INTERNET LINKS:
The BBC is not responsible for the content of external internet sites


PRODUCTS AND SERVICES

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East | South Asia
UK | Business | Entertainment | Science/Nature | Technology | Health
Have Your Say | In Pictures | Week at a Glance | Country Profiles | In Depth | Programmes
Americas Africa Europe Middle East South Asia Asia Pacific