Consumers urged to become less reliant on credit

The UK needs to stop relying on borrowing in order to pay for consumption, one economist has stated.

Charles Davis of the Centre for Economics and Business Research stated that people need to spend less and save more in order to rebalance the country’s negative savings ratio.

And he noted that those looking to borrow to help refinance their debt may find it increasingly difficult to do so.

“Banks are becoming increasingly cautious with their credit and their lending,” he explained adding that the first quarter of 2008 saw people using their savings or borrowing money due to consumption outweighing incomings.

Those struggling with their finances may wish to take Mr Davis’ advice and use it in a debt management plan in order to help them reduce their outgoings and become debt free.

Recent figures from Credit Action revealed that the UK’s personal debt at the end of August 2008 stood at £1,448 billion, greater than the country’s gross domestic product.

By Tom Musk

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