By Jonathan Davies

Rising levels of personal debt is costing the UK economy £8bn every year, according to charity StepChange.

The charity said it hears from half a million people in financial problems every year. It said housing problems and job losses put a huge burden on state services which contributes to the majority of the £8bn figure.

StepChange believes the government could save up to £3bn a year by offering effective help.

It also calculated the cost how much "problem debt", which is defined as debt that people cannot afford to repay, is costing the UK.

StepChange found that the biggest cost is having to rehouse and provide higher housing benefit for people who have fallen behind on mortgage or rent payments.

The next highest costs are related to employment. StepChange said the cost of sick pay to those off from work due to the stress of dealing with debt, and the benefits paid if they lose their job.

StepChange chief executive said problem debt was a "brake on people's capacity to work, or to return to work, a brake on aspiration and a brake on potential".

Joanna Elson, chief executive of the Money Advice Trust, which runs the National Debtline, said: "The human cost of this problem on people's health, relationships and quality of life simply cannot be calculated.

"Free advice provided at the earliest stage possible is the best way to limit the damage that unmanageable debt is causing, both to our lives and our economy."

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