Where are the good times? Currently hovering around the trillion-pound mark, consumer debt in the UK exceeded the GDP a year ago. It is believed that the GDP of two years would be required to clear the debts of this year alone. A sad state of affairs for the government and despair for the citizens. Measures are being taken to address this crisis, albeit with a lot of skepticism. Since the average consumer is averse to debt additions in today's credit starved market, any steps undertaken by the government to encourage spending would be ineffective to a large extent. A bitter pill to swallow, Britons are finding that passivity in expenditure is still not enough to prevent the slide towards insolvency. Commodities like fuel are more expensive than ever, thus creating potential poverty triggers.
Rates on credit card lending are also peaking at the most inopportune period. With a view of delaying the inevitable, people are relying on credit cards for their daily shopping needs. The monthly dues are therefore higher and defaults on the payment are now increasingly common. Figures suggest that over 5 million customers have skipped their dues in the last six months. As a natural consequence, consumer lending is growing at 6.6% annually. And debt consolidation is currently on the wish list of most consumers, with nearly 6.5 million people, willingly or unwillingly, transferring debts to a single lender in the last three years.
The slowdown in the economy has certainly dented consumer confidence in the UK. The average cost of living is at an all-time high, while interest rates and stringent lending criteria are further tightening the noose around desperate, credit hit citizens. It is a tricky situation for the government and the road to
redemption is still a speck in the horizon.
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