Debt Freedom Day will take longer to come

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The day that was achieved on the 23 August 10 years ago, Debt Freedom Day; will not arrive until 8th of January if not later, according to a research by Grant Thorntons.

Research carried out by the accountant firm shows that the total borrowing in the UK has overlapped GDP. Over the last 12 months there has been a 7.3% increase in the borrowing which accounts a whopping £1,444bn in contrast to GDP of £1,410bn.

Though much of these borrowings are secured against properties, more and more people will find it difficult to manage their borrowings in months to come. This will be due to the fall in the housing market, and slow economy. According to the accounting firm, insolvency figures could reach 120,000 this year. Last year more than 100 thousand people were declared insolvent, comparing to only 24,000 ten years ago.

Mike Gifford, a personal insolvency partner at GT, said: 'Typically there is a lag between individuals facing tough financial circumstances and when they become insolvent. It will be the next six to 12 months which reveal how seriously the credit crunch has affected people.'

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