Debt Freedom Day - the date when the UK produces enough income to cover our collective consumer borrowings - will not arrive until 8 January - next year. A decade ago, we achieved financial liberty this weekend, on 23 August, five months sooner.

Research by accountant Grant Thornton shows that borrowing on loans, credit cards and mortgages has gone up by 7.3 per cent to £1,444bn over the past 12 months, ahead of GDP at £1,410bn.

Although much of the personal debt is secured against property, more people are likely to find their borrowings unmanageable in coming months as the housing market falls and the economy slows. GDP growth ground to a halt in the three months to June, ending Gordon Brown's boast of uninterrupted expansion since Labour came to power.

Debt freedom for individuals may come much later than January, if at all. GT predicts personal insolvency figures could reach 120,000 this year. Some 100,000 were declared insolvent last year, compared with 24,000 a decade earlier.

Mike Gifford, a personal insolvency partner at GT, said: 'Typically there is a lag between individuals facing tough financial circumstances and when they become insolvent. It will be the next six to 12 months which reveal how seriously the credit crunch has affected people.'


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