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16/02/2016

British adults’ struggles to payday at record lows – R3

Fewer British adults say they are struggling from payday to payday than at any point in the last six years, according to the latest survey of over 2,000 British adults by insolvency trade body R3 and ComRes.

Just over a third (36%) of British adults say they often or sometimes struggle to payday. This is well down from a record high of 51% in May 2012.
 
A joint record low of 39% of British adults say they are at least fairly worried about their current level of debt. Debt worries were last this low in January 2012.
 
Phillip Sykes, president of R3 says: “Low inflation, low interest rates, and some real wage growth have helped British personal finances into an increasingly better shape. We’re seeing record low levels of economic pessimism and struggles to payday. Debt worries are down too.”
 
“But the same problems remain. Although numbers are at a record low, at least a third of British adults consistently struggle to make it from payday to payday. Similarly, around two-fifths of British adults, equivalent to nineteen million people, are worried about their debts.”
 
“Although personal insolvencies have fallen back to pre-recession levels, they are still well above where they were before 2003 when insolvency numbers started to grow rapidly. With so many people worried about their debts or struggling financially, relatively high numbers of personal insolvencies are not surprising.”
 
The research found that…
 
Personal Debt
  • Two in five British adults (39%) say that they are at least fairly worried about their current level of debt.
  • This represents a decline in debt worries over the past year: 41% of British adults were at least fairly worried in August 2015 and 46% were in March 2015.
  • Women (42%) continue to be more likely than men (36%) to say that they are worried about their current debt level.
  • Younger British adults are more likely than older British adults to be worried. Half of 18-44 year olds (50%) say they are worried, compared to a third of 55-64 year olds (34%) and one in six of those aged over 65 (17%).
  • Credit card debt (47%) remains the primary concern among those worried, followed by overdrafts (21%) and mortgage repayments (17%).
 
Struggling to payday
  • More than a third (36%) of British adults say they often or sometimes struggle to make it to payday, the lowest level since tracking began in 2010.
  • There continues to be a gender gap with respect to struggling to payday, as women (42%) are considerably more likely than men (31%) to report that they struggle.
  • The rising cost of basic expenses continues to be the main problem among those that struggle, particularly rising costs of food (49%) and household energy (37%).
  • Wage freezes are a lesser concern (15%) than a year ago (24% in March 2015), and the proportion of those saying that they are struggling due to recent cuts in welfare benefits(12%) has remained stable since August 2015.
  • Only 5% of British adults say they are likely to seek a payday or other short-term, high interest loan in the next six months, a slightly lower proportion than observed over the previous year (6% in August 2015, 8% in March 2015).
  • Worryingly, a high proportion of those who say that they are extremely worried (16%) or very worried (21%) about their current level of debt say that they are likely to seek a payday loan in the next six months, which could compound their already high exposure to debt and potentially further aggravate their financial struggles.
 
Financial situation and outlook
  • British adults continue to be more likely to expect their personal finances to improve (26%) than to worsen (15%) over the next six months.
  • Economic pessimism continues to stand at a record low –remaining at the same level as August 2015 (15%).
  • Younger adults are twice as likely to be optimistic as older adults, with a third of 18-44 year olds (34%) expecting their financial situation to improve over the next six months, compared to 17% of those aged over 55.
Phillip Sykes says: “It’s disappointing that we continue to see those most concerned about their debt are still the most likely to take on a loan. These people are vulnerable and tend to rely on short-term solutions to money issues which can leave them with longer-term problems.
 
“We still don’t have a record of those that enter non-statutory debt management plans so it’s difficult to know the true extent of those that are dealing with serious levels of debt.”

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.