Debt worries ‘affecting 60 per cent of consumers’

Consumer spending may be restricted this Christmas because 60 per cent of people are worried about their debt levels, according to insolvency professionals' body R3.

This was noted in the wake of the publication of new official retail sales figures by the Office for National Statistics (ONS), which appeared to show a positive picture in November as sales in the three months to that point had been up 0.7 per cent in volume from the quarter ending in August.

However, R3 president Frances Coulson argued this ignored the fact that shop inflation has been running at 3.6 per cent and said the real situation is that "both value and volumes of retail sales actually decreasing slightly month on month".

She went on to note that many enterprises are concerned with their debt levels (41 per cent), while the majority (58 per cent) have seen their profits fall, adding: "Bad weather and a post-Christmas shopping slump is sure to have a negative impact on many businesses."

This could mean more retailers go bust and if that is the case, it could lead to further increases in personal debt as many shop workers lose their jobs and are suddenly unable to pay back what they owe.

The ONS figures were also criticised by the British Retail Consortium, whose director general Stephen Robertson argued they could not possibly be accurate.

He said: "These ONS figures seem to fly in the face of retailers' experiences on the streets," claiming consumers have been very cautious as they work out how to budget for Christmas.

By James Francis