Falling disposable income causes ‘debt bubble’

Tim Sleep, director of retail at Ernst & Young, said that disposable income levels are ten per cent lower than just five years ago yet people are borrowing more.

“Access to debt, both in credit cards and mortgages, it’s certainly a lot easier to get now,’ said Mr Sleep on BBC Radio Four’s Today programme.

“The question then arises whether we are in a bubble. As people start to borrow more and more how long is this sustainable?”

According to Mr Sleep, rising oil prices, utility bills and council tax means that the average house has £82 less per month spare than in 2001, which could drive many to borrow more.