Brits have been spending more than they earn, prompting many experts to wonder if a harsh reckoning is on the horizon. The consumer lending industry has exploded in recent years, and Brits now lag only slightly behind Americans with regard to how much they borrow, on average.
As a result, the country’s current consumer debt load now ranks as a significant fraction of its annual GDP, a reversal of the historical norm where net savings was the rule. While most analysts believe there will be ways for the UK to dig itself out of this hole without undue distress, some are opining that only a painful meltdown of some kind will be able to resolve the problem for good.
Attitudes About Borrowing Have Changed, and There Are Now More Opportunities to Do So
Not so very long ago, the UK easily ranked among the most frugal countries worldwide. By the beginning of the 1980s, though, the balance had started to shift, with newly optimistic Brits beginning to borrow more freely than in the difficult times of the then-recent past.
Deregulation of the consumer lending industry and a more aggressive approach among lenders started to add to the momentum not long thereafter. Today, Brits regularly make use of consumer borrowing options that were simply not available in the past, some of which can easily cause more problems than they solve. While payday-style loans tend to come with far less onerous terms than in the United States, for instance, many UK residents have nonetheless succumbed to related troubles.
Some Experts Believe That Paying Down Debts Must Become a National Priority
As those who look into more information here will see, many experts now regard the current consumer debt situation in the UK as largely unsustainable. Being required to make regular payments to lenders to remain in good standing keeps consumers from putting their income and savings to more productive, economy-enhancing use.
Because of this, some analysts and pundits are now recommending that the government take a more aggressive stance regarding the reduction of the nation’s consumer debt load. Even simply encouraging Brits to become a bit thriftier and less dependent on borrowing could end up making a difference.