'Addiction to debt' will lead to it breaking the £10 trillion barrier

According to PwC, this "large and persistent" rise in UK debt has been driven by property-related borrowing by both households and non-financial companies and rising lending between financial institutions.

By comparison, UK government debt was relatively low and stable as a share of GDP from 1987 to 2007 and, despite rising sharply due to the recession, was still less than a sixth of total private sector debt in 2009.

Total UK debt is projected to top 10 trillion by 2015 at a time when GDP will still be below 2 trillion, according to PwC's latest UK Economic Outlook report.

High debt levels are affordable due to exceptionally low interest rates, but this may not remain the case as rates gradually rise back to more normal levels over the next five years, the report argues.

Paul Nixon, senior partner at PwC in Leeds, said: "The UK's addiction to debt has reached alarming levels during the past decade. The rise in debt of the financial sector from 46 per cent of GDP in 1987 to 245 per cent in 2009 is particularly striking as banks lent large amounts to the shadow banking sector and most financial institutions geared up in search of higher returns on equity. Even excluding the financial sector, however, gross UK debt almost doubled relative to GDP from just over 1.5 times national income in 1987 to around three times in 2009, with most of this increase coming in private sector debt."

In Yorkshire and the Humber, GDP growth is expected to be 2 per cent in 2011, rising from 1.9 per cent in 2010, according to PwC's research.