Executive Summary
According to Bank of England
statistics, the total volume of outstanding lending in the UK reached £1,114.2bn
in 2000 an increase of almost 40% since 1996.
The largest increase has been in the
growth of consumer credit, and in particular credit card borrowing. UK citizens
spend more as a proportion of gross domestic product (GDP) on plastic than in
any other country in Europe.
In 1998, the Late Payment of
Commercial Debts (Interest) Act was introduced to help businesses. The
legislation has already been extended, and further expansion is due. In August
2000, a new EU directive on late payment was issued, and the Better Payment
Practice Group (BPPG) is already working with the Government's Small Business
Service on its future implementation.
The Citizens Advice Bureau has
recently reported a sharp increase in debt problems, fuelling fears that people
are being encouraged to borrow more than they can afford. The problems created
by mounting consumer debt are at last beginning to gain more recognition in the
UK and throughout Europe.
A full investigation into current
marketing and lending practices is underway, designed to improve the quality of
information given to consumers, and ensure responsible lending decisions by all
lenders. More attention is being devoted to the better education of consumers
and the improved trading standards needed from suppliers and the providers of
financial services.
Key Note forecasts that the total
outstanding lending in the UK will increase by 18.1% between 2001 and 2005.
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