Consumer credit has been growing at 10 per cent a year and the FCA has estimated that three million people are trapped in “persistent debt”Reuters

Britain’s banks could lose £30 billion on credit card, car finance and personal loans if there were a recession, the Bank of England said in its strongest warning yet about spiralling consumer debt.

If unemployment doubled to 9.5 per cent and interest rates jumped to 4 per cent from the 0.25 per cent at present, households would default on £1 in every £5 of non-mortgage debt.

To protect Britain from any fallout high street banks and building societies have been instructed to find an extra £10 billion to shore up their balance sheets.

The decision underscored concerns that the availability of cheap money may be storing up debt problems.

Consumer credit has been growing at 10 per cent a year and the Financial Conduct Authority…