Has Debt Peaked In The UK?

As the worldwide credit crunch continues to grip the global economy, more and more consumers are struggling under the weight of ever increasing bills. The finance sector is in a mess and personal debt has never been higher in the UK, but will it get worse or are we nearing a turning point?

Unfortunately, the situation in the UK and around the world has the potential to get a whole lot worse before it gets better. The internal corporate money markets have all but dried up and mortgage companies are unable to finance new house purchases which will put yet more pressure on an already rocky property sector. As companies begin to look at cutting excess costs from their balance sheets we are sure to see renewed pressure on the employment market, which will feed into the retail sector and exert yet more pressure on corporate UK.

While many people may be looking towards interests rates to bail them out of any potentially tricky situations, this may not be as straight forward as in other areas of the world such as the US. The US Federal Bank have slashed rates other the water to try and stimulate a dying economy, but in the UK we have the problem of strong inflation which will reduce the potential for further rate reductions in the short to medium term. The government and the Bank of England are now in a very tricky situation where personal debt is set to rise even further, more of the UK population will seek assistance with their debt situation and we have an election coming in two years.

Many "experts" thought that the initial impact of the credit crunch would be short lived, but the delayed impact on corporate profitability in the US soon spread worldwide with vengeance. There is no quick fix for the current predicament and there will be further pain before we see any serious improvement.