Consumer debt is growing at its slowest rate for 13 years, according to figures from Alliance & Leicester’s Borrowing Monitor.
The latest figures for consumer borrowing other than for the family mortgage reveal that the growth rates recorded in recent years are reversing. The statistics show that borrowing has slowed to just 1.4% a year compared with more than 10%, which has been the average over the past decade.
This means debt is increasing more slowly than wage rises which are currently growing at about 4.2% a year. The report says borrowing is also growing slower than inflation, with the retail price index at 3.6% and consumer prices rising at 2.4%.
But David Harker, chief executive of the Citizens Advice Bureau, disagrees.
He says: “Our debt enquiry figures are deeply worrying. They suggest that a growing number of people are getting deeper into unmanageable debt it will be difficult to recover from.
“We are particularly concerned by the sharp rise in enquiries from people getting behind with mortgage payments. This is likely to lead to more people experiencing the sort of serious debt problems our advisers are already seeing day in and day out.”
But Chris Rhodes, managing director of A&L retail banking, says: “People are now seeing their unsecured borrowing fall relative to their earnings. The good news is that the economy is strong and employment is high.”