Britain’s debt drops
for the first time

For the first time since the current system began, the amount Briton’s owe as a nation has dropped.

During July 2009, British people paid back more than they borrowed, reducing national debt by £635 million. The total UK outstanding debt now stands at £1.456trillion.

The Bank of England changed the way they collect data on lending in 1993 and it is the first time since then that national debt has reduced. The drop was fuelled by a fall in the amount of mortgages and loans approved, reducing the amount borrowed. Low interest rates meant that mortgage holders were able to repay their mortgages at a higher rate, while the frugal culture inspired by the credit crunch drove many to focus on repaying unsecured debts.

While many will be impressed by the figurers, economists warn that for the economy to recover more people need to be borrowing money.

Benjamin Williamson, an economist at the centre for economics and business research, said: "Today's news will not make happy reading for policymakers who have taken significant steps over the last year to encourage greater volumes of lending throughout the economy.

"While today's data are surprising, it is important to remember that this monthly net change is relatively small given the stock of lending in the economy."