R3 – the insolvency trade body – has published its quarterly ‘snapshot’ on personal debt in the UK and it makes fascinating if scary reading. There is currently a growing sense of pessimism among individuals in respect of their personal debt with almost 40% of people worried about their current level of debt.
Credit cards are the main source of worry at 47% but overdrafts at 28% and mortgage repayments at 23% are not far behind. Indeed, concern re mortgage repayments is increasing quarter on quarter, up from 19% to 23%.
Payday paralysis is a worry for 38% of people in the sense that they are utterly dependent on receiving their funds on the next payday. In fact for monthly paid persons, the struggle often begins on day 20 of the month.
Other warning signs of distress are that over a quarter of people are saving less than they used to and one in five put off taking big financial decisions. A significant number of people are likely to have to dip into their overdraft to make ends meet and as many as one in ten are worried about being made redundant.
The number of people who believed their situation would improve over the next six months has reduced from 35% in July to 22% in October and the numbers who thought that their financial situation would deteriorate increased from 23% to 30% in the same three months period.
With the forthcoming increase in the VAT rates and public sector job cuts, it is not surprising that all the key indicators manifest an increase in pessimism about the future and this trend is unlikely to change for some time to come.