The huge public deficit in the UK is causing big headaches for the new coalition government, which blames the former Labour government for the problem and is making huge cutbacks to try and reduce the deficit. However, there is also the matter of spiralling personal debts, which are causing the same headaches for households and consumers that simply cannot cope with their debt levels any longer.

Figures have shown that the number of calls being made to the National Debtline run by the Money Advice Trust has more than doubled in the past year, as consumers struggling with their rising debt levels and sinking income struggle to keep up with repayments. Since 2008 the number of calls being made to the advice line has soared according to officials, with the global financial crisis and the recession both having taken their toll on consumer finances.

The charity has said that unless unemployment growth is halted these debt problems could continue to soar. However, with the coalition government having made huge cutbacks in the public sector, and with this expected to have a serious effect on employment levels in the UK the debt problems being experienced by consumers and households could get worse.

The Money Advice Trust also touched upon the debt problems that are being experienced by elderly homeowners, and suggested that a solution in these cases would be to release equity from their homes in order to settle other debts and reduce outgoings.

An official from MAT said: “There can be no doubt that continuing high levels of unemployment are contributing to the personal debt problems faced by the British public. We have grave concerns that households witnessing a fall in income due to unemployment will start to default on debt repayments, and that we may start to see a sharp rise in personal insolvencies.”