Consumer debt levels rise

It may be one year on since the collapse of Lehman Brothers and unprecedented activity in the world of financial services sparking a global recession, but it seems Brits may not have learnt a lesson from history.

Research from Unbiased.co.uk, the professional advice website, reveals that consumer debt levels are rising again, as £5.5 billion was borrowed in Q2 2009 - nearly double the amount borrowed in the previous quarter.

Britain's new savings levels crept up to £21 billion in Q2 after hitting an all time low of £14 billion in Q1. However it still falls well below savings levels seen this time last year when they are 70% higher.

Unbiased.co.uk's Savings Brake research reveals the ratio of how much we are borrowing (excluding mortgage debt) contrasted with how much we are saving. As a nation we are now borrowing 26p for every pound saved. This is in stark contrast to the second half of 2008, which saw consumers fight the recessionary doom and gloom by concentrating on clearing their debts, with £1.61 of debt repaid for every pound saved.

David Elms, Chief Executive of Unbiased.co.uk, comments: "The financial turmoil of 2008 prompted a dramatic retreat from savings in favour of repaying personal debt. The first half of 2009, in contrast, has seen consumers head back down the debt path as they shift back into borrowing. However, it is encouraging to see that Brits are beginning to save again, despite the low interest rate environment.

"After the topsy-turvy behaviour of financial markets and a deluge of contradictory reports on the economy in the media, it is not surprising that many consumers may feel uncertain about their financial standing. It is therefore vital for consumers to keep a close eye on their financial position, and anyone with financial concerns should seek professional advice from an independent financial adviser. Only an IFA will be able to help you strike the best balance between borrowing, saving and other financial aspects."

Those interested in boosting their savings should visit Unbiased.co.uk and download a 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