Thriftiness is 'bad for the economy'

While adopting a thrifty attitude may be good for individuals as it provides them with funds to place in accounts with the best savings rates, it is bad for the economy.

Ed Bowsher, head of consumer finance at lovemoney.com, said that the UK went on a massive borrowing binge in the decade leading up to the financial crisis and is now dealing with the consequences.

The comments follow a report by Moneysupermarket.com which revealed that over a quarter of Brits spend more than 40 per cent of their wage on non-mortgage debt.

Mr Bowsher said: "The ensuing debt overhang is massive and it was always going to take years to pay it off."

The situation has been made harder by pay freezes, redundancies and a slow economy.

However, he claimed that while being thrifty is the best approach to paying off debt and making savings, it will not encourage economic growth.

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2011-09-22 13:06:54 © Moneyextra.com