A MILLIONAIRE businessman has been heavily criticised by a credit union boss in a deprived area of Glasgow for encouraging people to take out loans and buy items using credit.
Dixons Carphone chief executive Sebastian James said he thought shoppers should spend with credit while borrowing was “cheap”.
It came as two new reports suggest households are struggling more than ever to make ends meet since the credit crunch of 2008.
The Eton contemporary of former prime minister David Cameron, who earned £1.7 million in just nine months in 2015, said that shoppers were borrowing with a level head and rising credit may reflect the growing consumer appetite for accessing products without owning them.
“I think the consumer is behaving rationally. You can enjoy things now because you can afford them and they are not costing very much to get, relative to the old days where you were paying a higher level of interest.”
He added: “As individuals we need to think about our personal debt, but also I think it is evidence of a changing thought about ownership.
“I think it is quite possible that customers are buying things that they could afford, but they take the credit because it’s cheap and they want the usage model. You see it with AirBnB [accommodation] and Uber [cab firm] – people don’t want a car, they just want to use a car.”
Glasgow councillor George Redmond, chief executive of BCD Credit Union in Bridgeton, Glasgow, criticised Mr James’s comments and urged borrowers not to take out loans or use credit unless for essential purchases.
He said: “I wouldn’t encourage anyone to take out a loan unless it was something they really needed.There are thousands of stories in Scotland where people have got themselves in to debt through over extending themselves. It can easily happen.
“ I would never advise people to borrow unless it was absolutely necessary. “ Meanwhile, a new study published today by Deloitte found that consumer confidence dipped in the last three months of 2016 due to the post-Brexit vote collapse of the pound weighing on the public’s mind.
The Consumer Tracker index, which saw 3,000 people polled across the UK, found that confidence in disposal income dropped from -12 to -14 per cent.
Ian Stewart, chief economist at Deloitte, said it may be a “sign that we are seeing the start of a squeeze on household incomes”.
The Resolution Foundation revealed incomes for working-age households have grown by only around 0.5 per cent in the current financial year, while the Bank of England raised concerns about rising household debt.
Economic analyst Stephen Clark said: “After a tight squeeze during the [financial] crisis, working-age households have enjoyed a living standards mini-boom in recent years.
“But fast-rising inflation this year has brought this all too short mini-boom to a sharp halt as pay rises have not kept up.”
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