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Specialists warn over rising debt

Next credit crunch ‘could hit in 2022’

Money - own picBritain is heading for another credit crunch in the next five years because of growing consumer debt, according to some of the world’s risk specialists.

Two thirds of the 200 delegates attending the University of Edinburgh Business School’s biennial Credit Risk and Credit Scoring Conference believed another credit crunch is likely to happen by 2022.

More than a third (38%) believe a financial crisis could hit even sooner – within the next three years.

The Bank of England announced in July that unsecured consumer credit has risen to £200bn for the first time since 2008.

When asked about Brexit, almost three quarters of the global finance specialists (73%) predicted the UK’s departure from the EU will harm consumer and businesses’ ability to obtain credit when they need it.

The majority (83%) said the Eurozone will suffer significant aftershocks from Brexit, with 42% reporting these would still be felt beyond 2020.

There was overwhelming support for a soft Brexit as a means of keeping the economy in check – 52% said a soft Brexit would improve financial stability in the next 12 months compared to 6% for a hard Brexit.

Professor Jonathan Crook, director of the Credit Research Centre at the University of Edinburgh Business School, said: “The view of our expert delegation echoes concerns that have been expressed recently by the Bank of England about lenders being complacent about consumer lending levels.”

 

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