UK Money News
19th May 2008
Financial hangover 'to last two years'
The problems of consumer credit are not going to go away easily, a former chancellor of the exchequer has warned.
Nigel Lawson, chancellor under Margaret Thatcher, said that despite signs of incremental recovery in the stock market and a feeling in some quarters that the worst of the credit crunch was over, more was to come.
Speaking to ITV's 'GMTV Sunday Programme', Lord Lawson argued: "We had a period of rapid growth, as the world as a whole has, it's been international . . . we are in a rather weaker position than most countries, because our boom has been based to quite an inordinate extent on a massive growth of consumer credit.
"People have got excessively into debt and they have to retrench – banks have made a lot of stupid loans and they are now going to have to rebuild their balance sheet."
Lord Lawson predicted the "hangover after the binge" would last for up to two years, saying it would be a "protracted" period.
The cumulative level of debt in the UK stands at over £1 trillion.
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