Rate hold could require debt solutions

The Bank of England has decided to keep the base interest rate at 0.5 per cent, continuing to provide much needed debt relief for many people reliant on low interest rates to maintain household bills and avoid debt problems getting worse.

Keeping the record low rate for the 18th month comes as CPI inflation sits at 3.2 per cent, meaning that people’s savings are being outstripped by the cost of buying things.

As a result of this, people stand a much greater chance of their savings being eroded away, which could leave them to seek debt solutions if their situation continues to deteriorate, or they have to make a big purchase, such as house repairs.

However, despite the squeeze on people’s money, economists have widely welcomed the move as ultimately aiding Britain’s recovery in the long term.

Kevin Still, director of Atlantic Financial Management, says: "This comes at a time when the Insolvency Service has just reported a 5 per cent increase on the same period last year in personal insolvencies, including further rises in the number of Individual Voluntary Arrangements (IVAs)."

"Grim" future of debt for Brits

16/09/2010

New unemployment stats show a slight drop in the numbers out of work, but there are fears it is the ...

Unchanged inflation, debt link

15/09/2010

Consumers are still being threatened by rising debt levels as CPI inflation stayed at 3.1 per cent i ...

Double dip debt risk

25/08/2010

Britons could find themselves needing more debt solutions in future, after a Bank of England adviser ...

8% interest rate heralds debt concern

24/08/2010

Interest rates need to be brought up to 8 per cent by 2012 in order to battle inflation, even though ...