More Britons could face needing debt help if the world endures a new recession, something that a group of world leaders has argued can only be avoided through concerted government-level action.

Prime minister David Cameron is among the signatories of a letter urging members of the G20 to act, ahead of the group's November summit in Cannes.

It was also signed by the leaders of Australia, Canada, Indonesia, Mexico and South Korea.

Arguing that a "lack of visible political will" is itself a barrier to economic recovery, it urges nations to get on top of their deficits and other financial problems, including the eurozone, with whom Britain has a vital trading relationship.

The letter said: "Eurozone governments and institutions must act swiftly to resolve the Euro crisis and all European economies must confront the debt overhang to prevent contagion to the wider global economy."

In his own comments, Mr Cameron argued: "Every country has got to face up to its own problems and difficulties and deal with them."

Should this not happen, the world economic situation may deteriorate, plunging countries like the UK back into recession and causing more personal debt through business failures and redundancies.

However, paying off debt has been blamed by some for slowing down the economy, with the Labour Party and the Trades Union Congress arguing the UK government is cutting "too far and too fast".

And trimming personal debt also has a negative effect as it uses up cash that could be spent in shops, head of consumer finance at lovemoney.com Ed Bowsher stated this week.

By James Francis
 

The number of people requiring individual voluntary arrangements (IVAs) may be set to rise, if a new warning about the global economy proves to be accurate.

In its latest World Economic Outlook, the International Monetary Fund (IMF) said the global economy has entered a "dangerous new phase" of low growth, with the potential danger to become a new world recession.

Although it did not actually forecast a new contraction, it lowered forecasts for growth across the globe and in specific areas.

As well as predicting a slowdown in the eurozone, it also tipped the UK to only see gross domestic product expand by 1.1 per cent this year and 1.6 per cent in 2012 – down from the 1.7 per cent and 2.3 per cent previously predicted.

Such a situation may have a negative impact on those trying to pay off their debts, as a weak economy may bring many more job losses and therefore undermine the ability of some to pay what they owe.

Faced with debts piling up, some may wish to consider an IVA, as this can reduce monthly repayments, freeze interest and set a time limit on debt, with the revised schedule of payments lasting no more than five years and anything left being written off after this time.

UK government economic policy has come under fire from some critics, but in a speech earlier this month at the London School of Economics, deputy Prime minister Nick Clegg insisted that switching to a "plan B" is not an option.

He said a key element in generating economic growth is investment in infrastructure projects such as better road and rail links.

By James Francis
 

Consumers are facing a new area of rising debt – water bill arrears.

Official figures have revealed consumer complaints about water companies have been falling, but chief executive of the Money Advice Trust Joanna Elson said that while this is the case, a much more concerning problem is arising.

She remarked: "The number of people calling us for help with water debts has been sharply increasing over the last couple of years."

Ms Elson added that while the typical proportion of those in debt contacting the organisation who are behind on water bills is between two and four per cent, this has risen to nine per cent in the past 18 months, with 10,000 calls received by the Trust so far this year.

She added: "The sobering fact is that paying water bills is clearly becoming increasingly difficult for many households across the country."

Nor is the problem likely to disappear in the near future, Ms Elson concluded.

Such comments may indicate that the need for debt help is widespread and problems are arising from hitherto uncommon sources.

In recent months, more concern has been expressed about energy bills and what is defined as fuel poverty – a situation in which households have to spend at least ten per cent of their income on heating and lighting the home.

Consumer website uSwitch recently estimated that the combined effect of the price hikes announced by the big six energy companies this summer and early autumn will be to put another 570,000 households into this situation, making the total 6.9 million.

By Joe White
 

The need for Britons to seek debt management help may be greater than that in other countries as a government minister commented that the UK ran up the "highest level of household debt in relation to income in the world" in the lead-up to the credit crunch.

Such a comment was made by business secretary Vince Cable, as he addressed the Liberal Democrat party conference in Birmingham, noting that rather than Britain being hit by a "virus" from overseas, many aspects of the economic crisis have been home-grown.

Mr Cable said the current situation for consumers and the economy is a tough one with a hard time ahead and stated there is no point in politicians pretending it is otherwise.

He also stated: "Living standards are being squeezed by continued high imported inflation. And the painful truth is that Britain is a poorer country as a result of the financial crash."

While such a message may seem a gloomy one, it may also prompt those who do have debt problems to seek a debt management plan or other measures to resolve their financial issues, instead of holding out for better economic times that may be some way off.

Mr Cable's point about the high level of household debt in the UK echoes the findings of a survey published this week by Moneysupermarket.com, which showed that servicing non-mortgage borrowing alone costs consumers £9 billion a month.

This included 27 per cent of consumers having to pay out over 40 per cent of their income each month to service their debts.

Posted by Paul Thacker