Brits facing 'debt hangover'

A leading Bank of England official has recognised the severe debt problems facing many British households in a recent speech.

Speaking in Liverpool yesterday evening, the Bank's executive director for financial stability, Andrew Haldane, warned that many Brits are experiencing a "debt hangover".

Mr Haldane added that a sharp rise in long-term interest rates would have the effect of pushing struggling households over the edge.

As a remedy, he called on banks to conduct debt-for-equity swaps. In short, this move would redesign existing borrowing contracts - allowing for a more flexible repayment regime and giving consumers a greater chance of avoiding defaults.

However, Kevin Still, director at Atlantic, said that it is unlikely that lenders will have an appetite for such arrangements, and questioned the suitability of the funds - which are unbound by the same lending codes as more traditional loans.

Mr Still noted that, as a result, "a need for more non-borrowing debt solutions" remains inevitable in the coming months and years.

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