Being in debt is becoming a way of life among Britain's adult population, a spokesperson for the Confederation of British Industry (CBI) has stated.
Following the announcement of the Bank of England's decision to impose a quarter-point rise on the base rate, Ian McCafferty, the CBI's chief economic advisor, told Channel 4's New at Noon that Britons are "learning to live with higher levels of credit".
The reliance of British consumers on debt meant that manipulation of the base rate is an effective way of regulating the ability to spend, he added.
"As credit levels rise the impact of a change in interest rates becomes that much greater on monthly repayments," Mr McCafferty explained, with spending constrained more if an individual bears more personal debt.
He predicted that the impact of this latest interest rate rise would feed through into consumer spending by the end of 2007.
No further interest rate rises would be needed in the near future, he intimated, with "consumers…starting to feel the pinch a little" and a cooling housing market contributing to lower inflation.
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