Millions of young British consumers are taking on debts in order to make purchases they think will make them look cool, according to recent research.

Figures compiled on behalf of the mobile banking service Monilink have shown that almost seven in ten Britons aged between 16 and 34 have used debt to buy luxury goods to compete with their peers in the style stakes.

But for many, this approach to financial management has left them with debt problems, with 22 per cent admitting that repaying the money they have borrowed is causing "significant" concern.

"This study highlights the price younger Britons are willing to pay for peer acceptance. But for many, the price is too high – leading to financial problems," said John Milliken, managing director of Monilink.

Almost a quarter of the British 12-year-olds polled by Abbey recently said they were afraid of facing debt problems when they reach adulthood.