Millions on brink as interest rates rise
Millions of Britons were pushed closer to insolvency as interest rates rose today.
The Bank of England’s interest rate setting monetary policy committee (MPC) raises and lowers the cost of borrowing in the UK in an effort to keep inflation as close to the government’s target of two per cent as possible.
And today, the MPC raised the UK’s underlying interest rate to five per cent at midday. This is the highest level since the Bank began lowering the cost of borrowing in an effort to boost the economy in the wake of the September 11th attacks in 2001.
But since then the UK’s personal debt has risen to a record £1.25 trillion.
And with rising interest rates combined with record debt, millions are now facing bankruptcies.
Debt consultancy Thomas Charles estimated that today’s rise will put pressure on 1.1 million Britons.
“When interest rates rise, increased mortgage payments put many under serious financial pressure and management of unsecured debt is bound to suffer,” said James Falla, managing director of Thomas Charles.
And with bankruptcies already at record highs, Mr Falla predicted that today’s rise could see “personal insolvencies spike to a level not seen before in Britain”.
Liberal Democrat treasury spokesman Vince Cable added: “People are now facing a three pronged attack from rising interest rates, rising unemployment and record levels of personal debt.
“This will spell further catastrophe for many hard working families.”
