Senior economist at the Centre for Economics and Business Research (Cebr) Jonathan Said expects to see price inflation and rising mortgage payments across the country put significant pressures on British incomes.
As a result, debt levels look likely to rise, along with the number of applications for insolvencies over the coming 12 months, suggested Mr Said, who works for an independent consultancy.
“People may take on extra borrowing – but also that is becoming more expensive now because of interest rates. So there is a chance of increased insolvencies in 2007 and 2008 as well,” he said.
Last week, the Bank of England’s monetary policy committee voted to maintain interest rates at their current level of 5.25 per cent for the next month at least.