Soaring debts stoke recession fears

LONDON, June 28 (UPI) -- Economists say soaring household debt is stoking fears in Britain that a severe recession may be in the cards as part of an economic slowdown.

Government figures released Friday showed British families owed a record 173 percent of their incomes in debt, the highest figure ever recorded for an industrialized economy, and that is leading some observers to warn that the country is in for a much more drastic downturn than is now anticipated, The Daily Telegraph reported Saturday.

The 173 percent income-to-debt figure represents an even higher level than was sustained by Japan in 1990 when the country entered a decade-long period of deflation, government economists said.

The news came on top of other alarming numbers as the week ended, including a downsizing of the forecast growth of Britain's gross domestic product, as well as a survey indicating consumer confidence in the economy has sunk to new lows.

Jonathan Loynes of Capital Economics told the Telegraph, "With growth already so weak in the first quarter before the full effects of the credit crunch and housing downturn had been felt, the economy looks set to slow significantly further over coming quarters."