Find innovative solutions to rising debt problem: Osborne

Find innovative solutions to rising debt problem: Osborne

	Published : Sat, 13 May 2006 15:35 By : David Simms Print this Story

LONDON - Shadow chancellor George Osborne has said that Britain has become a "credit card" nation with citizens who owe millions, thus undermining the progress made by the economy. Mr Osborne said that although the availability of credit was a huge plus, it also had the ability to cause financial misery.

Osborne is due to address a Credit Today conference in London where he will tell delegates that innovative solutions are needed for this problem. "As in many markets, liberalized credit markets have boosted our freedom and boosted our economy. But, as well as these great advantages, the expansion of credit has brought challenges," Mr Osborne will tell the conference. "First, for some, especially vulnerable, families, too much debt can cause misery and great financial hardship. And second, high levels of debt, both public and private, make the economy more vulnerable to certain types of shock, and may put macroeconomic stability at risk.

Osborne maintains that this situation will greatly hamper the economy since spiraling debts will bring more misery to families, since debt seems to affect families who have the least ability to cope with it. "Just this week, the Governor of the Bank of England described the rise in debt and bankruptcies as a 'social problem that is materializing'. He is right. We are in danger of becoming credit card Britain," Mr Osborne will say.

"Last year, three million people had problems paying off debt. Another 12 million have kept up payments only after a struggle. 1.1 million people contacted the Citizen's Advice Bureaux with debt-related inquiries."

Debt had become an increasingly worse problem for a small, but significant minority of Britons. "For many of those struggling with debt problems are also the most vulnerable - often living from benefits or in badly-paid jobs," he will say. "This is not a problem that is going away. As we as a nation get richer, problems with debt are getting worse."