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Do we really need debt?

While the subject of record debt levels in the UK continues to monopolise many financial headlines, we appear to be overlooking the fact that debt is what actually drives an economy forward although there needs to be sensible use of borrowings at all times. The problem we are seeing at the moment derives from the fact that for the last few years at least, debt in the UK has been very cheap and affordable to the vast majority of the UK population. This has led to banks chasing more and more profitability on small and small margins based upon ever rising degrees of risk.

While the UK government is adamant that the fault is elsewhere with regards to both the national debt and consumer debt in the UK, the UK authorities need to take their fair share of the blame. After all the UK government had encouraged a boom in the UK housing market, the like of which has never been seen before, almost entirely built upon debt. In the good times debt is easy to fund, and indeed more debt had been available to many, but once the boom turns to bust it is then that the hard work begins.

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