Christmas spending increases consumer debt

FRIDAY, JANUARY 12, 2007

According to a recent report by accountants Grant Thornton, some 10,000 people in the UK have overspent during the Christmas period and face the prospect of insolvency or bankruptcy.

Grant Thornton predict that some 30,000 people will face insolvency during the first three months, 10,000 of these having pushed themselves over the edge by running up debts in the period before Christmas. Mike Gerrard, Head of Grant Thornton's personal insolvency practice said; "Since last Christmas, several developments such as interest rate rises, sky high utility bills and increases in unemployment, have contributed to pushing more people into financial trouble".

Other figures from the Bank of England suggest that nearly 8% of homeowners with a Mortgage are struggling to meet their debt repayments after recent rate hikes, utility prices increases and other inflationary pressures.

Christmas spending was generally higher in 2006 than in the previous year, despite the pressures on many UK households due to a diminished disposable income.

Grant Thornton suggested that many individuals used credit cards to fund their festive spending, rather than tightening their belts, and could find themselves with severe debt problems or even face bankruptcy.