Perhaps it’s time to freeze living standards

result of the referendum. It will take time for the UK to establish new relationships with the European Union and the rest of the world.

“Some market and economic volatility is to be expected as this process unfolds.”

The central bank said it was closely monitoring investors’ willingness to fund Britain’s large current account deficit, as well as high levels of household debt. Why is he so worried? Because British households have been taking on new debt at a pace not seen for more than a decade.

Loans for new cars and cheap cash through personal loans have been the symptoms.

The Office for Budget Responsibility (OBR) cautioned recently that UK households were on course to spend more than they earned for the rest of the decade.

Such a long period of living so far beyond their means would be “unprecedented”, the fiscal watchdog commented.

Households are expected to spend £58 billion more than they earn this year, rising to £68 billion by the end of the decade. That contrasts with a household surplus of £37.7 billion in 2012 as Britons tightened their belts in the wake of the financial crisis and saved more.

The OBR believes that net unsecured borrowing on credit cards and loans will rise to £662 billion by 2020, from £447 billion in 2016.

This is expected to push up the unsecured debt-to-income ratio to 46 per cent, from 39 per cent currently.

The overall debt-to-income ratio, which includes mortgages, is expected to rise to 164 per cent in the same period.

Of course, following the Brexit vote, these forecasts could quickly change, especially if households do indeed heed the Bank’s warnings.

But, as things stand, the average UK household will owe close to £10,000 in debts such as personal loans, credit cards and overdrafts by the end of 2016, according to a report from PwC, Precious Plastic: How Britons Fell Back In Love With Borrowing.

It warned that many people were becoming complacent at managing their debts.

So it would be wise to ponder all this, do your own personal review of your finances, rein in your aspirations, and speak to your adviser.

There are things that can be done – transferring to zero interest credit cards, consolidating debts, paying off the most expensive ones first, checking that you are getting the best deals on overdrafts, mortgages, utility bills, insurance and the like, and avoiding payday lenders.

Your adviser and/or organisations such as Citizens Advice, National Debtline or the Consumer Credit Counselling Service can help you work out what to do about your debts, establish a budget that you can stick to and negotiate on your behalf with your creditors.

Of course it is reckoned it will take two years or so to exit the EU, assuming we do actually go through with it.

But best to get your finances sorted now in case the worst does happen. Trevor Law is managing director of Merito Financial Services, chartered financial planners, based in Solihull. Email: tilaw@meritofs.com