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Fool.co.uk: People have no money to spend
21/07/2008 17:30:00
Recession will be hard to avoid because of the dual issue hitting customers, in that they don't have money to spend and hardly any sources of cheap credit, a financial expert has said.
The comment from independent money advice firm, Fool.co.uk, came in response to the summer forecast from the Ernst and Young Item Club, which said the UK will struggle to avoid recession in 2009 if the predicted GDP growth of only one per cent materialises.
David Kuo, head of personal finance at the company, said: "There has been over ten years of growth here in the UK and over those ten years people have taken on a lot of debt."
"What they've actually seen is appreciating house prices and low interest rates, so consequently they've borrowed a lot of money over that period of time," he added.
He went on to reveal his organisation's calculations that the average person's surplus income currently stands at about two per cent of household income.
Figures from money charity Credit Action show the average household debt in the UK before mortgages is £9,341.
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