Debt problem may remain despite positive PMI

The latest data on the economy has suggested the UK may not be heading into recession after all, an expert has said.

According to the Markit/CIPS Purchasing Managers' Index (PMI) for services, the sector saw very positive movement in January, with a jump in the index from 54 to 56 and the highest increases in confidence in a single month recorded in the history of the survey.

The news follows an improvement in the manufacturing PMI and Royal London Asset management economist Ian Kernohan said: "While it would be wrong to read too much into one month's set of data, it looks unlikely that the UK has entered a double-dip recession."

Chief economist at Markit Chris Williamson said the indications suggest the UK economy may in fact expand at around "trend" rate (the equivalent of 2-2.5 per cent annually) over the first quarter.

He remarked: "Much uncertainty persists, but this is nevertheless a far better start to 2012 than almost all were expecting to see."

However, for those who are in debt, any economic recovery could take a long time to provide the sort of benefits that could translate into an easing of their situation, such as the availability of better-paid jobs.

For those who are in difficulty now, seeking a debt management plan may help, as it can spread payments out and make it easier to cope, ensuring ends are met while personal finances are still under strain and making matters easier to handle as the economy recovers.

By Joe White