According to the Lib Dems, consumers in the UK are now spending more of their annual income on trying to clear debtthan has been the case since 1997 and debt management problems are mounting as the cost of borrowing increases.
Moreover, the average British household now spends close to nine per cent of its annual disposable income on servicing the interest on their debts and millions of people across the country are being severely stretched financially, claims the opposition political party.
Vince Cable, Liberal Democrat Treasury spokesperson, said: “As chancellor, Gordon Brown neglected to tackle this ticking time bomb and we are already seeing rising numbers of repossessions and personal bankruptcies.
“As prime minister, he must take urgent action to tackle spiralling levels of personal debt before more families find themselves on the street.”
It is widely expected that the Bank of England will raise the cost of borrowing again in July after the bank’s monetary policy committee narrowly voted against such an increase earlier this month.