Expert issues long-term economic warning

Peter Spencer, chief economic adviser to the Ernst & Young Item, maintains that as the number of people facing debt management trouble increases, the potential impact of an interest rate rise is heightened also.

And with such a rise looking likely next month, Mr Spencer suggests that many credit consumers across Britain could soon find it more difficult to find a long-term debt solution.

Speaking on BBC Radio Five Live, the finance expert said: “We are borrowing to finance our consumption and of course we’re doing that at a time when the economy and everything else, our personal finances, are looking pretty sweet.”

“The worry is what happens to our own finances when things turn sour,” he added.

According to figures released earlier this month by Credit Action, the average household debt management mountain in the UK amounts to £8,793, excluding mortgage arrears.