Indebted set to ‘feel the pinch’

Vicky Redwood, a UK economist with Capital Economics, told Channel 4 that the most recent rise in the base rate of interest will significantly impact British consumers, many of whom are already spending a large percentage of their incomes of servicing their debts.

For mortgage payers the average outlay will increase considerably in the wake of the interest rate rise, while credit card debt is set to become more costly for millions, suggests Ms Redwood.

“Because households have a much higher level of debt now than they did, say ten years ago, even a small increase in interest rates could have a significant effect on the amount of money they have to spend on servicing that debt,” she made clear.

Figures released earlier this year by the charity organisation Credit Action revealed that consumers in the UK borrow an average of around £360 million each day.