BoE `encouraged rise in personal debt`

A former chief of the Bank of England (BoE) yesterday admitted that it had pushed up house prices and encouraged consumer debt to help avoid a recession.

Lord [Edward] George, who headed the Bank between 1993 and 2003, said that he was aware that the approach of stimulating consumer spending was unsustainable.

He said: "That pushed up house prices, it increased household debt ... my legacy to the MPC [monetary policy committee] if you like has been `sort that out`."

Lord George said the measures, though they resulted in some people falling into debt and others being priced out of the housing market, were necessary to avoid facing a similar recession to that which the US faced during that time.

The MPC "did not have much of a choice" in the matter, he added.

Britain`s personal debt goes up by £1 million every four minutes, according to Credit Action.