BoE failed to spot debt danger

Bank of England deputy governor Sir John Gieve has admitted that the Bank did not understand the severity of the problems leading to the economic crisis.

Speaking to the BBC, Gieve said that the Bank of England was aware that “crazy borrowing” was taking place, and that the rise in house prices was unsustainable.

But he added that the Bank did not think the problem was as serious as it has turned out to be.

The financial crisis was largely caused by relaxed lending criteria from banks and other financial institutions, and many borrowers eventually found they were unable to repay their debts.

A spokesperson for debt management company Gregory Pennington said: “The numbers of people falling into debt have risen noticeably over the past few years, and since debt problems tend to filter through over a long period of time, it’s possible that the numbers will continue to increase throughout 2009.

“We advise anyone who finds themselves struggling with debt to speak to an expert debt adviser before the problem grows out of control.”

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