Australian households are the most indebted in the world, according to research by Barclays, which warns that the country would be vulnerable in the event of another global financial shock.
Barclays chief economist for Australia Kieran Davies says private sector debt-to-income gearing is currently at an all-time high of 206 per cent, up from a pre-global financial crisis (GFC) level of 191 per cent. This put Australia just within the top 25 per cent of the world when it comes to leverage.
However, when it comes to household debt – which includes mortgages, credit cards, overdrafts and personal loans – Australia leads the global field, according to Mr Davies, with credit continuing to pile up while the rest of the developed world is paying it down.
Using nominal gross domestic product, the bank estimates household debt at 130 per cent of GDP, which is the highest level on record.