Debt consolidation need may grow as economy stays in doldrums

More people could find themsleves needing debt consolidation help in the near future as new figures have revealed the economy is continuing to struggle.

Hopes that the UK economy would pick up and see an acceleration of growth were dashed as official figures for the second quarter of 2011 showed the level of gross domestic product (GDP) was only 0.2 per cent higher than in the first quarter.

Such slow growth may be bad news for struggling consumers and businesses, with possible job losses being one potential cause of people getting into severe debt.

The Office for National Statistics said there were some factors that may mitigate the overall picture, mentioning the royal wedding and the extra bank holiday that came with it, plus the effects of the natural disaster in Japan.

It stated: "It is not possible to state precisely what the net overall impact of these special effects might have been," although it estimated these events may have trimmed service sector GDP by 0.4 per cent and production by 0.1 per cent.

Commenting on the GDP figures, Royal London Asset Management economist Ian Kernohan said the figures were around what the Bank of England had expected, although he noted the figures are frequently revised upwards or downwards by a substantial amount.

More importantly, he concluded, the "big picture" is one of gradual change that Britons may not enjoy the benefits of in the short-term.

He stated: "The UK economy is going through a major rebalancing, from private and public consumption to net exports and business investment, which will take several years to complete."

By James Francis