Personal debt level tops UK's income

PERSONAL debt in the UK exceeds the income generated by the country as a whole for the second year running, research showed today.

The total amount owed by consumers through mortgages, loans and credit cards rose by 7.3 per cent during the year to the end of June to stand at £1.444 trillion, according to accountants Grant Thornton.

But during the same period gross domestic product (GDP) rose by only 5.1 per cent in nominal terms to £1.41 trillion. As a result it would take until January 8, 2009, to pay off the UK's outstanding consumer debt from GDP during a calendar year.

Stephen Gifford, Grant Thornton's chief economist, said there was no cause for panic because personal debt was well covered by the UK housing stock. But he added: "If the property market and economy continue to weaken, the current levels of personal debt will become unsustainable."