UK personal debt levels higher than GDP

Britons'' cumulative personal debt has exceeded the income the nation generated by the economy for the second consecutive year, it has been announced.

According to accountants Grant Thornton, the total amount owed by consumers on credit cards, loans and mortgages hit £1.444 trillion for the 12 months to June.

However, in the same period the country''s gross domestic product (GDP) stood at £1.41 trillion.

Stephen Gifford, Grant Thornton''s chief economist, said: "Despite the global downturn flattening the growth of personal debt and UK GDP over the past few quarters, debt levels continue to grow at a faster rate than the income the UK generates.

"Although there is no cause for panic as personal debt is well covered by the UK housing stock, the figures clearly illustrate the continuing problem of growing personal debt levels in the UK."

Experts predict that soaring consumer debt levels could fuel a huge rise in demand for debt consolidation loans and Individual Voluntary Arrangements (IVAs) both this year and in 2009.