'One in 10' facing a debt crisis

DEBT collectors are chasing record levels of unpaid bills, Ernst & Young has warned. The accountant warned of a 'real crisis' for a heavily indebted 10% of the population, which holds half of all the unsecured debt.

Philip Middleton, head of retail banking at Ernst & Young, said most borrowers had been prudent.

But he added: 'There are large pockets of the population where indebtedness is already at a dangerous level. It will not take much of a change in circumstances to produce a worrying situation for the major High Street lenders.'

He said tax rises, higher interest rates or a rise in unemployment would cause the problem to escalate.

Ernst & Young's ITEM forecasting club predicts that rates will hit 5% by the end of next year.

The Bank of England's inflation attitudes survey published today shows 71% of people expect rates to rise.