Lobby pokes holes in King’s claims during recession

Lobby group Save our Savers claimed Sir Mervyn King has given the impression that households have stopped borrowing.

Simon Rose, spokesman for Save our Savers, said that by saying borrowing came to an abrupt halt in the 2008/2009 recession, Sir Mervyn had given the impression that household borrowing had fallen.

He said: “British households are more indebted than ever.

“The only reason that headline totals have fallen is because of banks writing off bad debts.

“Total consumer debt stood at £1461bn in November 2008 and £1452bn in November 2011. But banks wrote off £26.7bn of consumer debt. The total excluding bank write-offs rose by £18.4bn.

Mr Rose said credit card debt continued to run rampant, rising from £53.3bn to £56.5bn.

“But an extraordinary £13bn has been written off during that period, total credit card debt excluding write-offs has risen £16.1bn.

“As the Bank of England itself said there is little sign that, at the aggregate level, households are making an active effort to pay down debt more quickly than in the past.”

Jason Witcombe, chartered financial planner for London-based Evolve Financial Planning, said: “Statistics are easily massaged but what cannot be denied is that many households with big mortgages are being bailed out by low interest rates at the moment.

“My impression is that even a small rise in interest rates is going to push a lot of borrowers over the edge.”