Debt help need may rise as recession return predicted

More consumers may find themselves needing debt help as a return to recession in Europe has been predicted by most of the economists quizzed in a poll…

More consumers may find themselves needing debt help as a return to recession in Europe has been predicted by most of the economists quizzed in a poll.

The BBC survey found 25 out of 27 respondents forecasting a new economic contraction, a situation that could also push Britain into a new downturn as export markets in neighbouring countries shrink.

And the shape of the eurozone may also be in doubt, with the majority putting the probability of its break-up at between 30and 40 per cent, while a fifth said it would not exist in its current form a year from now.

The survey also found most anticipate that the Bank of England base rate will stay at 0.5 per cent throughout 2012.

This may be good news for homeowners struggling to stave off the threat of repossession, as it will keep mortgage costs down.

However, it will also erode the value of savings as interest is lower than inflation, which could hurt those who might fall back on such funds should they be among the victims of the rise in unemployment that a new recession would bring – making it  more likely they will get into debt.

Forecasts of a gloomy 2012 have been provided by a number of economic forecasters and government ministers have also warned that the year ahead may be a very difficult one.

In his new year message to Liberal Democrat members, party leader and deputy prime minister Nick Clegg said the coalition government has been working on its priority of saving the UK economy, but warned: "That economic rescue mission is not over yet."

By Joe White

Tell others:

shortlink