An expert has claimed Britain is over-reliant on personal debt and has a tendency towards "speculative housing bubbles".

Wolfgang Munchau, associate editor of the Financial Times, has warned Britain’s economy is likely to see the effects of these problems over the next five years, which are looking "pretty grim".

He told the newspaper: "Britain has owed much of its 15-year spell of good economic growth to an unprecedented credit and housing binge that has lasted abnormally long."

Financial advice charity Credit Action reports that at the end of August, personal debt in Britain stood at £1,363 billion, an increase of £115 billion on the previous 12 months.

It reports that consumers will borrow an average of £315 million today while 317 people are declared insolvent or bankrupt and 77 properties are repossessed.

The charity said earlier this year that borrowing and spending at an "astonishing rate" is now part of everyday life, however it warned that there are real risks involved when debtors borrow sums they may struggle to repay.