8% interest rate heralds debt concern
24/08/2010Interest rates need to be brought up to 8 per cent by 2012 in order to battle inflation, even though such a raise would hurt people paying off debt.
The 8 per cent figure is suggested by the Policy Exchange, whose chief economist Andrew Lilico believes that "once the economy gets growing sustainably, there will be a huge expansion in the money supply, which will lead to inflation."
Dr Lilico adds that the only way to handle this is by raising interest levels towards the levels of the early 1990s, when they were close to 10 per cent.
If this happened, people paying off debt build up during the recession will be stung for even higher repayments and may require debt management if they struggle to cope with what they owe.
Kevin Still, director of Atlantic Financial Management, says: "Such dire predictions based around uncertain changes in the economy are unlikely to boost consumer confidence.
It would cause a huge dilemma for lenders and the government debt relief schemes if millions of home owners quickly fell into serious arrears on unsecured and secured borrowing."
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8% interest rate heralds debt concern
24/08/2010Interest rates need to be brought up to 8 per cent by 2012 in order to battle inflation, even though ...
