Britain’s borrowings break £11 billion barrier

A climate of high interest rates and the ongoing consumer uncertainty over the credit crunch have led to consumers accessing their savings to pay for summer expenditure including holidays, leading to a reduction in the UK’s savings balances.

Also, according to Unbiased.co.uk’s latest Savings Brake figures, the UK as a whole amassed over £11.7 billion in borrowings in Q3 2007.

The Savings Brake research, which reveals the ratio of how much we are borrowing, not including mortgage debt, contrasted with how much we are saving, also shows another worrying trend. In addition to rising borrowing levels, UK savings dropped by over £11 billion in Q3 2007. This means that for every pound UK consumers saved during the third quarter of 2007, they borrowed 35 pence. This is a significant increase from the 13 pence borrowed against every pound in the previous quarter.

David Elms, Chief Executive of Unbiased.co.uk, commented: “We have seen a lot of activity in the financial markets in the third quarter of 2007, which marked the beginning of the Northern Rock crisis. Interest rates over the summer were still at a high level of 5.75% and many people will have felt the impact of the credit crunch starting to bite their disposable income.

“While the high level of borrowing and a drop in savings for this quarter may come as no surprise, it is a worrying development. And with the cost of Christmas about to hit the nation’s pockets over the next couple of months it is unlikely that we will see a significant improvement in the Savings Brake ratio. It is therefore important for people to take control of their finances now to ensure their savings and borrowings remain at a healthy level.”

To take control of your spending and borrowing, visit unbiased.co.uk/getsaving to download your free copy of Unbiased.co.uk’s dedicated guide - Join the Savings Revolution - which looks at how you can budget to save more, and options of where to put any extra money. You can also obtain details of local independent financial advisers to talk though the most suitable savings options for you by visiting unbiased.co.uk/getsaving.