Debt -
British Debt Soars Over U.S. Debt - 15/04/2008
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Debt has become the norm for many people these days. Loans and credit are very easy to come by and are offered to nearly everyone. A relaxed attitude towards borrowing and high spending has contributed to a nation in debt.
Alexis Hall a young media relations executive with over £31,000 worth of debt says “ It was so easy to get the loans and the credit that you almost think the goods are a gift from the shop” reflecting the attitude of many young borrowers today.
Debt has been good for our economy, encouraging spending and growth. The government has borrowed in order to invest in public services, improving infrastructure, health services and education. More jobs have been created and people are secure in their jobs giving them confidence to borrow and spend. The ability to spend freely has been a large contributor to the healthy economy we have today.
Many see America as the ultimate consumer nation, endorsing borrowing and spending on credit cards and it was an American company that introduced the first credit cards to the U.K. But personal debt in Britain is now higher than that of the U.S. and we have the dubious honour of being the most indebted rich nation on the planet.
Britain is now £1.4 trillion in debt, higher than our gross domestic product-that’s the amount of money we make as a nation each year. Although America is a massive £7 trillion in debt, this is still lower than their GDP.
With Credit products more widely available and easily obtainable than savings products, it is little wonder so many people are buying on credit. The government positively endorses borrowing with their student loan system, putting many young people in debt before they have even started their first job.
Many spend much more than they earn, with the U.K. debt to income ratio 1.62. That’s substantially higher than all of Europe and compares unfavourably with the U.S. where there is a debt to income ratio of 1.42.
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