Britons repay record levels of debt

by Gill Montia

Story link: Britons repay record levels of debt

Figures from the Bank of England show that Britons repaid record levels of unsecured debt during February.

Consumers unburdened themselves of a net £245 million of borrowings during the month, the highest level of repayment since records began in 1993.

The figure stands in stark contrast to a year earlier, when borrowers took on an extra £2.1 billion, or even January of this year, when an additional £165 million of unsecured credit was raised in the form of personal loans, overdrafts and credit card transactions.

However, the UK’s legionary consumer debt mountain (including mortgages) is still estimated by the Bank at £1.45 trillion.

The sum remains huge, despite the collapse in new mortgage lending.

Not content with paying off debt at record levels, Britons are also flocking to building societies with deposits.

The Building Societies Association reported yesterday that net receipts shot up to £1.59 billion in February, the highest amount on record for the month.

However, the national focus on repaying debt and stashing cash in safe havens is unlikely to please Prime Minister Gordon Brown, who is reliant on consumers helping the UK spend its way out of the recession.