Soaring debt levels put economy at risk

SOARING personal debt has put the Irish economy at greater risk of shocks than ever before, according to a major new report by Goodbody Stockbrokers.

It said the surge in household debt levels over the past decade would leave the economy more exposed to a boom-bust cycle if interest rates or unemployment rose. Average household debt would reach 160% of disposable income within two years, up from 50% in 1995 and 120% at the end of last year.

But Goodbody chief economist Dermot O’Leary said the increase had been driven by sound economic factors, and dismissed the theory that higher consumer spending was solely down to lower interest rates fuelling demand for credit.