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Stormy Weather Ahead For UK Loans

Despite being hailed by Tony Blair as an election hero, Gordon Brown appears to be in for a tough time with regards to the UK economy.

High Street sales in April slumped by almost five per cent compared with the same period in 2004, the biggest fall in a decade. News on Friday confirmed that Britons owe a staggering £1 trillion in mortgage borrowing, credit cards, personal loans, bank overdrafts and forms of credit.

With personal credit such as credit cards and unsecured loans being easier to obtain than ever and competition at its fiercest, it seems consumers in the UK are all to eager to take advantage of these market conditions and saddle themselves with, and in some cases, crippling levels of debt.

House repossessions are at their highest level for ten years 25,900 orders processed through the courts in the first three months of this year.

Recently many high profile companies, such as MG Rover, Marconi and the Abbey National, have announced job losses. Such job losses have greatly contributed to the recent rise in unemployment.

It appears that these economic nightmares are coming home to roost, with 13,229 people declaring themselves insolvent in the first three months of this year, the highest figure since records began in the UK in the 1960’s. These figures are not surprising given the record levels of personal debt, of which economists had warned, and rising unemployment.

Consumers, worried about their debt, haven’t had their troubles to seek after being hit with five interest-rate rises since November 2003, which has resulted rises in council tax and National Insurance.

Households are also seeing a rise in other living expenses such as groceries, petrol, utility bliss and air fares due to the surge in oil prices and inflation, which is at its highest since 1998.

This has resulted in a slowing down an almost stagnant house market as well as a slump in consumer spending, which have hit the High Street very hard. This has also lead to the economy slowing down and economists hoping for the Bank of England to cut interest rates.

With disposable incomes being stretched to the limit, some economists believe we could see one in twenty stores closing in the next three years. With credit card companies ending their introductory offers such as 0% interest balance transfers, many consumers are at their credit limits resulting in a drop in consumer spending.

It now appears that the carefree days of spending with credit obtained through the likes of credit cards and personal loans may be coming to a painful conclusion

 

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