UK consumers repay record levels of debt

Consumers repaid a record level of unsecured loans and credit card debt during October as they continued to focus on improving their finances in the face of the recession.

The figures will reinforce suggestions that Britain will be slow to emerge from its worst recession in decades as the cost of repaying multi-billion bank bailouts weighs on businesses and consumers.

Households reduced their outstanding credit card, loan and overdraft debt by £579 million during the month, the biggest contraction in unsecured lending since Bank of England records began in their current format in 1993.

It was also only the sixth time on record that repayments for consumer credit have outstripped new borrowing.

Hopes that the global economy is heading for a robust recovery have been shaken in recent days on fears that Dubai could struggle to repay debts used to turn the tiny state into a world powerhouse.

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