More than 10 million people may default on repayments for mortgages, credit cards or personal loans by the end of the year.

A forecast from one of Britain's biggest accountancy firms, says that "the merry-go-round of credit is about to stop", as millions of people realise their take-home pay is not enough to service their debts.


Britain is more indebted than any other country in Europe


According to KPMG, 22 per cent of those adults with debts - equating to 6.6 million - are already finding it difficult to meet their repayments.

However, 35 per cent - or 10.6 million - are worried they will find it even more difficult to pay back their debts in a year.

The figures come from a KPMG survey conducted by YouGov and commissioned by the ITV documentary Repossession, Repossession, Repossession.

The programme, to be shown on Wednesday night, is presented by Jeff Randall, The Daily Telegraph's Editor at Large, and exposes how a decade of cheap credit and rising house prices have conspired to leave millions of people with insurmountable debts.

Consumer debts have trebled in the past decade with each household in Britain owing £51,730 on average - a total of £1.345 trillion. The country is more indebted than any in Europe.

Steve Treharne, a partner at KPMG specialising in insolvency, said: "In my view 2008 will the year the chickens come home to roost. A lot of people have been living the life of Riley on credit. They have been able to borrow at 0 per cent finance, and been able to take out new cards at will.

"This is all going to have to stop. It is unsustainable," he said, arguing that not only are house prices - on which much of the debt has been secured - set to fall, but also that banks have already started to cut back on extending credit.

Last week, Egg wrote to 160,000 of its customers saying their cards were going to be stopped.

This move followed a similar tightening of credit terms by Barclaycard, Britain's biggest credit card lender, which has lowered the credit limits for half a million of its customers.

Mr Randall, who as part of the programme met people who had been driven to the point of suicide by their debts, said: "What we believed was widespread economic prosperity turns out for many to have been an illusion, funded by excessive debt."



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