Monday, July 12, 2010

Britons' personal debt exceeds Britain's GDP?

Britons have racked up so much debt on loans and credit cards that the total borrowed now exceeds the entire value of the economy, new research shows today. The financial consultant Grant Thornton is forecasting that gross domestic product (GDP) will hit £1.33 trillion this year, less than the £1.35trn which was outstanding on mortgages, credit cards and personal loans in June.





The symbolic overtaking is the first time that the country's 60 million people owe more to the banks than the value of everything made by every office and factory in the country. It prompted a warning that personal borrowing was so out of control that many more people would be pushed over the "financial edge". The runaway housing market is the biggest reason why consumer debt has spiralled, totalling £1.131trn. Debt on personal loans and credit cards totals £214bn. Overall, individuals owe the staggering sum of £1,344,721,000,000.








What's you opinion?

Britons' personal debt exceeds Britain's GDP?
As they say statistics can say anything....what they didn't show is the amount of a persons assets in the equation...so someone may owe £50,000 but their house could be worth £400,000 they did not take this into account....when they do, things do not look quite so bad.


Its like saying I borrow more than I earn, but my assets are worth a £1,000,000 is that person well off or not.....I would say well off.
Reply:Instead of the Government borrowing to finance the growth of this country they have passed that onto the general public.





" Look" we will be told by the Government, "the public deficit is so much smaller than ever it was and we are still investing in our country."





That is because we have borrowed the money for you but we dont have the IMF or World Bank to bail us out and you can bet the government wont want to help anyone who is a little more stretched next time rates go up or council tax increases or we taxed even more.





And what do we have by way of thanks. A society of greed and disrespect.
Reply:In some ways, I think young people expect too much too soon nowadays. When my Husband and I first moved in together we had everything secondhand, from family, friends and charity shops etc. Now it seems that anyone can get a new suite with matching curtains and carpet from a catalogue, and have to pay 25-30% interest on their new stuff. We didn't have a car for the first 4 years of living together, and when we did finally get one it was a £100 banger, now you can pop to a car supermarket and get a new car, but have to pay huge amounts of interest etc.





Credit is far too easy to get nowadays, and some people are not educated enough to realise how much interest has to be paid etc, etc.





I think that high school kids should be taught a variation on the old-fashioned "Home economics" lessons. They should be taught how to budget, how to save money and what to look out for when it comes to "free" or "low interest" deals.





God, re-reading my post makes me sound about 100, but I am (only) 32, but I have seen my friends and neighbours get themselves into huge amounts of debt, simply because of how easy it is to get credit. This site:


http://www.brighthouse.info/


is a perfect example of "look, you can have loads of new stuff" sales, but the interest charged is horrendous! For example, there is a 19 inch LCD TV, it's cash price is £280.67, but the final price for paying in installments is £622.44!!!





My Husband himself was made bankrupt years ago because we were too stupid to realise how easy it is to slide into serious debt. I can guarantee you one thing though, we will never ever be in that position again, if we don't have the cash to pay for something, we don't get it. It's as simple as that.
Reply:People can't borrow unless others are willing to lend. The banks are supposed to be the financial experts and can control how much we borrow. Unfortunately they appear to have been acting quite irresponsibly of late, relying on the strength of the housing market to secure their debt as though house prices will keep on rising for ever. When it comes to credit cards, I am constantly having my limit increased without asking for it, and they also send me credit card cheques which can be used to pay cash into the bank. It is crazy. Credit cards should be for purchases, not raising cash and paying off other debt. If people want a loan, fine let them apply for it and use strict lending criteria.
Reply:Storm in a teacup. The vast majority of that debt is in mortgages, debt which is serviced over decades. Comparing the 2 figures is meaningless and serves only to induce fear.
Reply:i think we will be able to get a reconcilliation loan from the bank so that our monthly repayments will be less...................................


then we can go to DFS and buy a new sofa again
Reply:I think it is very frightening indeed. The fact that quite a % of the population has no debt! The very young and some of the older members of the population do not.





It will end up affecting most of us unless GDP increases markedly - certainly in adverse ways, as far as our living costs are concerned. If interest rates rise to stem it this will tip a lot of people into bad problems. Yet something must surely be done.





I feel very sorry for younger people trying to buy homes.





In the longer term, as well asb short, we must as a nation learn to live within our means. Very difficult today when consumer goods,hoildays etc. are so attractive and seem relatively cheap.
Reply:house prices up, travel costs up, taxes up, price of bread up...things are getting too expensive and people's salaries are staying the same and aren't going up with it
Reply:Having loans and credit cards is fine if you can afford to make the repayments and pay it all back. However, what really gets me is the rise in people getting heavily into debt through running up credit cards and loans and then going into voluntary bankruptcy - they are instantly debt free and in a few years time their bankruptcy order is lifted. This should not be allowed. People want the have it now, celebrity lifestyle they simply cannot afford. It will all crash again I suspect and once again, those who have been sensible will suffer at the hands of those who could not help themselves.

broken teeth

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