MOUNTING debt, now at a record £22,000 per household, is storing up huge problems for the future, an economist has warned.

Dennis Turner, chief economist for HSBC, said the average person now owed a massive 120 per cent of what they earned.

"It's a staggering amount of debt, the highest it's ever been," he told around 200 business people at the Ramada Hotel, Hollingbourne.

Consumer spending was growing by three per cent a year and amounted to about one third of the UK's trillion-pound economy. "The consumer is delivering two per cent GDP growth year after year after year," he said.

Soaring debt was fuelled by low interest rates. But what would happen when rates started to rise as they almost certainly would next time?

Rising interest rates would "squeeze" the consumer and make them vulnerable to financial difficulty.

But most people did not care because of the rising value of their homes.

"The average household is sitting on equity of 90 grand so why should they worry about 20 grand debt?"

Debt was not confined to individuals. The Government was also borrowing heavily to finance public spending.

But high levels of borrowing were not sustainable indefinitely.

"What we need to see is more entrepreneurs, more investment," Mr Turner said.