What is the relationship between interest rates, consumer spending & debt?

Finance

Interest rates, consumer spending and debt

What is the relationship between interest rates, consumer spending & debt?

If personal debt levels are rising to abnormal levels again and if the UK recovery is relying on the consumer to spend more – surely the UK’s low interest rate policy is simply feeding the debt problem and potentially creating a massive headache for the future?

The economy needs the consumer to spend more – but with inflation eroding real wage growth – any consumer spending needed to aid the UK economy is coming from loans, credit cards and borrowing. This is increasing debt levels again!

And that can’t be good!

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