Bank of England governor Mark Carney fears for the long-term effects, predicting the”pockets of risk” in encouraging financially vulnerable people to borrow. Carney further insists high street lenders toughen their lending standards to discourage defaults or late payments.

In September, the Financial Policy Committee said that British high street banks risked losing £30bn from defaults on credit cards and personal loans, if there were a downturn in the economy.

Despite the brighter outlook from consumers, this new flow of unsecured credit has not been enough to boost household consumption. Pantheon Economics spokesman Bob Tombs believes that this rise in borrowing could act as a drag on household spending.

Moreover, the proposed higher interest rates could dampen the economy and consumer confidence further.