Many recent studies paint a grim picture of the state of personal debt in the United Kingdom. According to the Family Finances Report from the insurance firm Aviva, the average British household owes nearly 13,000 pounds in unsecured loans in July 2018. This figure hasn’t been so high for the past two years, which shows that many people are in need of more ways to meet their growing expenses. As a result, British citizens most commonly rely on personal loans from their friends and family to get by: around 2,000 pounds of borrowed money on average per household. Furthermore, the popularity of getting payday loans, with exceedingly high interest rates, has risen to an average of one out of every 20 families. Citywire calculated that up to 52 percent of families are taking out consumer credit loans from sub-prime lenders including pawnbrokers and alternative banking institutions. Starting in April of 2018, the Financial Conduct Authority will take over regulation of the entire payday loan industry in the United Kingdom due to growing complaints of questionable business practices that take advantage of those already struggling to pay back what they owe.
Also noteworthy are the statistics recorded by the debt charity known as “Credit Action.” They found in April of 2018 that failure to pay personal debts results in the repossession of one more personal property every 17 minutes. Once in every five minutes, another British citizen declares bankruptcy. They further recorded the average British household debt by factoring in mortgages for a total of 54,017 pounds. The number of people who are unemployed is now more than 887,000, and these are people who have been living without work for more than one year.
The Guardian announced an interesting piece of news for those struggling to repay their personal debts. In response to these concerns about the growing financial problem, the governor of the Bank of England, Mark Carney, announced on August 28, 2018 that, ” … borrowing costs will remain on hold for the next three years … ” while further explaining that interest rates would remain low for the British public. The public response to this news still appears sceptical at best. The ones suffering from high personal debt include not just those who have lost their jobs unexpectedly; there is also a rise in the baby-boomer homeowners approaching retirement with meager pensions that cannot cover their increasing living expenses. For them, the situation is more worrying because they have less resources and opportunities to pay their outstanding debts than the younger generations. A great number of middle-class citizens have felt the growing weight of personal debt for years, and they struggle on insufficient incomes that don’t match their daily needs.
The future remains uncertain as people seek new solutions to face the growing personal debt crisis.