Browns "economic miracle" is a debt-fuelled spending binge...................
How living in debt is a lifestyle choice for millions
By Sarah Womack, Social Affairs Correspondent (Filed: 24/02/2006)
It says the nation is gripped by a borrowing culture, with the vast majority of those in debt showing no concern about the amount they owe.
Almost half of adults (44 per cent) owe money on a variety of credit and loan products, not including mortgages, according to the research by Mintel, the consumer analysts.
While a quarter of borrowers have debts of less than £500, eight per cent owe between £10,001 and £20,000, and a further five per cent have borrowed more than £20,000.
That adds up to around one in eight (13 per cent) borrowers - or 2.5 million adults - having total debts in excess of £10,000.
On top of that, 70 per cent of those who owe more than £10,000 are not concerned about their level of debt and one in four might consider borrowing more.
Only one in 20 borrowers is "very worried about the amount of debt that they hold", the report found, with the vast majority remarkably relaxed about their debt position.
Paul Davies, Mintel's senior finance analyst, said the survey appeared to suggest that consumer demand for credit might not yet have abated.
"While many people in debt might have the means to continue meeting their repayments, the high levels of debt and lack of worry does clearly represent a cause for concern," he added.
"Although the research certainly shows that an impending debt crisis is not inevitable, a large minority of households are extremely vulnerable to any deterioration in the prevailing economic conditions.
"A significant weakening in the labour market or a sustained bout of monetary tightening could clearly have a devastating impact on the finances of many consumers, and lead to a sharp rise in the level of bad debts."
Credit cards are the most common form of borrowing with almost three in
10 people holding an outstanding balance on one of these products. Six per cent of adults also have an outstanding balance on a store card.Mr Davies said: "This high incidence of credit card and store card debt partly reflects the ease with which consumers can borrow through these accounts.
"These products have acted to blur the distinction between spending and borrowing and have helped to create a 'spend now, pay later' culture.
"The credit card industry's promotion of zero per cent purchases and balance transfers for fixed time periods will also clearly have encouraged some consumers to borrow money via this route."