Economic optimism leads Brits back to borrowing

News that the first green shoots of recovery may be showing has led Brits straight back down the path to debt, according to a report from advice website Unbiased.co.uk.

According to the findings, there was a dramatic shift in consumer behaviour in the first quarter of 2009, with Brits borrowing more than they repaid for the first time in six months, Brits took out more debt than they repaid. As a consequence, the total amount of new debt committed to in the first quarter of this year rose to £2.7 billion.

The report shows that as a nation we are now borrowing 19p for every pound saved. This is in contrast to consumer behaviour in the second half of last year, where recessionary fears saw £1.76 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 quarter of 2009, in contrast, has seen consumers going back to ‘the old ways’ as they shift back into borrowing.”

“After the relentless financial gloom of last year, the public mood seems to be changing with financial forecasters spouting optimism over Britain’s economic prospects. However, though this is certainly a positive development, it is vital for consumers to continue nurturing their financial position. 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.”

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