The Bank of England (BoE) has criticized complacent lenders after growing levels of personal debt have put the U.K. economy at risk of another economic downturn.

The central bank’s financial stability director said banks, credit card companies and car loan providers risked slipping into a “spiral of complacency” by assuming risks to the U.K. economy are receding when in fact they are growing.

Outstanding credit card balance transfers and personal loans in the U.K. grew 10 percent in the past year, while household incomes rose by just 1.5 percent. This disparity risks lenders going from “responsible to reckless” as consumers become increasingly unable to meet loan repayments, Alex Brazier said during a speech to the University of Liverpool’s Institute for Risk and Uncertainty.

“The spiral continues, and borrowers rack up more and more debt. Lending standards can go from responsible to reckless very quickly,” the BoE’s Brazier warned Monday.

“The sorry fact is that as lenders think the risks they face are falling, the risks they – and the wider economy – face are actually growing.”

Brazier criticized lenders for reducing lending requirements so that the credit scores of new borrowers are now lower than they were two years ago. It is such behaviours which led to the global economic crisis of almost a decade ago.

He said that lenders had not yet entered but were dicing with the “spiral of complacency” and reiterated the central bank’s new three lender “defence lines” devised to help protect the wider economy.

These include pro-active supervision of banks, meaning that the boards of all lenders must prove their safeguards to regulators, and regular and rigorous stress tests. They also include new restrictions on high loan-to-income mortgages, which vary an individual’s loan-to-income limit according to their personal circumstances.

“(The defence lines) do not eliminate the risks that borrowers and lenders take on when entering into a loan but they safeguard everyone else – the wider economy – from collateral damage. They mean there’s every prospect that we can make the economy a safer place than it has been in the past and that we can stop watching endless repeats of Debt Strikes Back,” Brazier said.

However, lenders have hit back at accusations of complacency. The chief executive of Virgin Money told CNBC Tuesday that she backed the crackdown on unsecured lending but insisted that consumer indebtedness at the challenger bank was well-governed and falls below the national average.

“As far as unsecure lending is concerned, of course I agree with the Bank of England, it can’t get out of control and most of what the Bank of England has said has been about motor finance and unsecured lending. Virgin Money doesn’t do either of those things,” said Jayne-Anne Gadhia.

“We absolutely agree that underwriting standards can’t fall. We’ve tightened ours, and expect that that’s what other banks should be doing too.”

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