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17/11/2015

Personal finance pessimism at lowest level – R3

  • Debt worries and struggles to payday also near record lows
  • But significant proportion of British adults stuck in debt
 
A record low 15% of British adults expect their personal finances to worsen in the next six months (since research began in 2010), according to research by insolvency trade body R3 and ComRes.
 
This is well below the record high 43% of pessimistic British adults in January 2011.
 
In more good news for the state of Britain’s personal finances, the research also found debt worries are at their lowest in three years, while the proportion of British adults who say they struggle to payday is at its lowest in two years and very close to a record low.
 
41% of British adults are at least fairly worried about their debts, while 38% say they often or sometimes struggle to payday.
 
Phillip Sykes, President of R3, says: “There is plenty of good news for Britain’s personal finances. Debt concerns are down, pessimism is down, and payday struggles are down, too. The economic recovery is finally being felt in people’s pockets. This is reflected by a rapid fall in personal insolvencies over the last year.”
 
“There are still some causes for concern though. One-in-five people say they do not have any savings, and while a record low number of people are struggling to payday, to have two-in-five people still in this situation is more than we would like to see.”
 
“There are also a sizeable number of people who are at risk of being caught in a cycle of debt. That’s not good news for the long-term.”
 
The research found that while just 6% of British adults felt they were likely to take out a payday loan in the next six months, this rose to 19% among those who are already ‘very’ or ‘extremely’ worried about their current level of debt.
 
And while 38% of all British adults often or sometimes struggle to payday, 78% of those who are ‘very’ or ‘extremely’ worried about their debts are in this position.
 
Phillip Sykes comments: “Using more debt to pay for old debts is not always sustainable in the long-term and it can make existing problems worse. Without help, there’s a danger these people will be left behind by economic growth.”
 
“It’s important there aren’t any unnecessary barriers to people dealing with their debts. For example, to access debt relief through bankruptcy requires payment of an upfront fee of £705 to cover court and government costs. This fee should be made payable in instalments over the course of bankruptcy to allow people to access debt relief and protection from creditor action immediately.”
 
 
Credit card debt still leading cause for concern
 
Of the 41% of people at least fairly worried about their debts, 46% are worried about credit card debts, making them the biggest debt worry. The second most common debt concern is an overdraft (24% worried), followed by mortgage repayments (19%).
 
Among 18-24 year olds worried about their level of debt, the biggest debt worry is a student loan: 56% of the 53% of 18-24 year olds at least fairly worried about their level of debt are worried about their student loan.
 
The research also found that:
 
  • 56% of those aged 25-34 are at least fairly worried about their debt, the highest proportion of all age groups. Those aged 65 and over are the least worried about their debt (20% are at least fairly worried).
  • 43% of women are at least fairly worried about their debt, compared to 38% of men.
 Notes:
  • ComRes interviewed 2,047 GB adults online between the 21st and 23rd August 2015. Data were weighted to be representative of all GB adults aged 18+. ComRes is a member of the British Polling Council and abides by its rules. Data tables are available on the ComRes website, www.comres.co.uk

Notes to editors:

  • R3 is the trade body for Insolvency Professionals and represents the UK’s Insolvency Practitioners.

  • R3 comments on a wide variety of personal and corporate insolvency issues. Contact the press office, or see www.r3.org.uk for further information.

  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by recognised professional bodies
     
  • R3 stands for 'Rescue, Recovery, and Renewal' and is also known as the Association of Business Recovery Professionals.