While Britain battles its homegrown issues, global debt levels have dropped. Despite historically low levels, interest rates are finally rising around the world. The subsequent rise in borrowing rates will make debt less affordable and potentially drive consumers and businesses to possess greater fiscal responsibility. Considering the damage that the last financial crisis did to nations around the world, it is positive to see international economies demonstrating greater caution.
The shift in behaviour was reported by the Bank for International Settlements, who revealed debt levels had fallen from 219.5 per cent in 2016, to 218.3 per cent last year. The analysis concluded that, at least in part, the cause for the drop was GDP growth, which has risen significantly in the UK, US and China in particular.
Ultimately, this new data highlights the absence of reckless spending, which was something that had defined the climate of the financial crisis a decade ago. The stunted spending behaviour that has befallen the UK at least, has run up insolvency figures and put pressure on business owners to scrutinise cash flow to maintain stability.
Here at the Credit Protection Association, we help our Members in reducing their debt pile, chasing down unpaid invoices and eradicating late payment. More than that, we instil in our Members the importance of keeping debt levels low and preventing financial distress.
“There has been a desire since the financial crisis on all of our parts to bring debts down – we got a bit of a shock and we don’t want to find ourselves in that position again,” said Paul Jackson, head of research at Invesco.