As economic reports warn of a double dip recession, Brits are returning to repaying their debts, a behaviour last seen at the beginning of the financial downturn, according to the latest figures from unbiased.co.uk.
Research from the professional advice website has revealled Brits have let their savings nose-dive and reverted back to repaying more debt than they're borrowing, a trend last seen in Q4 2008.
Unbiased.co.uk's Savings Brake research reveals the ratio of how much we are borrowing (including unsecured borrowing and equity release but excluding mortgages) contrasted with how much we are saving.
Over the second quarter of this year, Brits repaid £1 billion over and above what they were borrowing - which equates to consumers repaying 7p of debt for every pound they saved.
This is in stark contrast to the final quarter of last year, which saw Brits adding £16 billion to the debt mountain as they borrowed 66p for every pound saved.
The figures also reveal how Britain's savings levels seem to be the victim of this rush to repay debts, falling by nearly £8 billion over the second quarter of 2010 compared with the first quarter - from £23 billion to £15 billion.
"Brits appear to have shifted their financial habits to reflect those last seen at the height of the credit crunch, with debt repayment top of the priority list,” said Karen Barrett, Chief Executive of
unbiased.co.uk.
“For the first time since 2008, consumers are now paying off more debt than they're borrowing - however this has inevitably also resulted in a drop in savings levels.
"For those who are in a position to save, no matter how little, it is important to ensure you are doing whatever you can to make your savings work hard - especially as interest rates remain static.”
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