THE UK is sinking even further into debt according to new research by consultancy firm McKinsey.
McKinsey had said that a “painful” period of deleveraging could last for six or seven years following the financial crisis, cutting the debt to GDP ratio by 25 per cent.
Yet an updated report is expected to show that combined debt levels, in both the government and private sectors, have almost reached five times the UK’s GDP.
Total indebtedness has climbed to 492 per cent of the country’s GDP from 481 per cent at the end of 2008, according to figures seen by the BBC.
The findings will prompt another headache for chancellor George Osborne, who is tasked with weaning the UK off its debt habit.
Prime Minister David Cameron told his party conference this autumn: “The only way out of a debt crisis is to deal with your debts.”
After an early version of the speech suggested that Britons must take responsibility by cutting credit card debts, Cameron altered the speech to say that households were already paying off loans. Yet McKinsey’s data shows that debts are still on the up.
Official figures today will reveal the government’s latest progress in cutting its mammoth annual deficit.
City A.M. Reporter