Consumers back to racking up the debt

THE thrift and caution of the recession may have been a short-lived phenomenon, judging by new figures suggesting consumers are returning to their old spend and borrow habits.

At the end of last year consumers were borrowing 62p for every pound they saved, whereas they were repaying 1.68 of borrowing for every pound saved at the end of 2008, research by financial advice website claimed.

Borrowing crept back up in 2009 after consumers focused on paying down debts in 2008 as the recession took hold. UK consumers borrowed more than 28 billion of non-mortgage debt last year, up from 1.8bn in the first quarter to 14.3bn in the final three months of the year. The figures contrasted with the previous year, when borrowers repaid 39.3bn of non-mortgage debt.

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Savings levels also declined in 2009, with just 71.6bn put aside compared with 113.4bn the previous year. Britons were borrowing just 13p for every pound they saved at the beginning of 2009, but this soared to 62p by the final quarter of the year, Unbiased found.