The mayor of New York Michael Bloomberg has warned that public and private debt has fuelled a looming global recession.

He made his comments during a speech at the Conservative party conference in Blackpool and warned that "all indications" suggested an economic downturn is on its way.

High debt levels will mean a recession is even more painful, he said, adding that the crisis was a "self-fulfilling prophecy" which was driven by a "rational belief" the credit crunch would get worse.

"But this time, the stakes are higher because more people owe more debt and so do our governments," he added.

Mr Bloomberg said it was prudent to cut spending and discover innovative ways to "do more with less".

Money advice charity Credit Action reported today that the total UK personal debt in the UK stood at £1,363 billion at the end of August.

It warned consumer credit lending to individuals had risen to £215 billion, a 5.5 per cent increase over the previous 12 months.