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Three hundred people a day in England and Wales declared themselves insolvent in the summer as Britain's trillion pound debt mountain claimed a record number of victims. Mortgage repossessions also rose sharply - up more than a fifth - as households have struggled to repay home loans at a time when house prices have been rising almost twice as fast as wages.
And a near certain hike in borrowing costs next week can only pile further pressure on the growing number of Britons struggling to cope with credit card debts and soaring household bills. Analysts argue the situation will get worse and hit economic growth next year.
"With unemployment continuing to rise, utility bills soaring, debt levels at record highs and home buyers stretching themselves ever more as house prices rise move significantly higher, it seems certain that individual insolvencies and mortgage repossessions will climb markedly further over the coming months," said Howard Archer, economist at Global Insight.
Insolvencies in England and Wales leapt an annual 55.4 percent to hit a record 27,644 in the three months to September, according to the Department of Trade and Industry on Friday. The rise was weaker than the 66 percent increase seen in the previous quarter, but the numbers have yet to fully reflect the impact of August's surprise rate hike to 4.75 percent.
The record number of people drowning in debt triggered calls from UK education charities and the financial community for personal finance to be taught in schools. "Future generations must be given the opportunity to enter adult life with a good grasp of budgeting and an understanding of how debt can be managed in a responsible fashion," said Steve Treharne, head of personal insolvency at consultancy KPMG. It is not just consumers who are suffering from an appetite for living beyond their means.

Copyright Reuters, 2006

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