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27/06/2017

Concern about personal debt levels has fallen – R3 comment

Responding to the publication by the Office for National Statistics of preliminary results from its Wealth and Assets Survey, Andrew Tate of insolvency and restructuring trade association R3 commented:

"The ONS's figures show that 26% of people who are carrying some form of non-mortgage debt say that their debt is either a ‘heavy burden’ or ‘somewhat of a burden’. This figure has fallen since 2010-12, but the combined percentage is still over a quarter of adults in this position.

"One factor behind this fall in concern could be record low interest rates, which have been suppressed for some years since the global financial crisis. This may have allowed complacency to creep in, as people with persistent debt are able to roll their debt over from one zero-percent or low interest credit facility to another, without reducing the overall amount that they owe. Unemployment is also at a very low level, which is helping people keep their finances ticking over.

"However, with interest rates set to rise, and uncertainty around Brexit causing ripples in the economy, there is no guarantee that the current, relatively benign atmosphere for borrowers will persist. Wage growth has flattened in recent months and inflation is creeping up, which will put more pressure on people's finances.

"We strongly recommend that anyone who feels concerned about their levels of debt seek advice from a qualified advisor, and even those who feel unconcerned about their ability to meet their commitments should consider a personal finance health check, to ensure that they are protected against any future shocks, such as an economic downturn, job loss, or change in life circumstances."

Table: Extent of financial burden of non-mortgage debt, percentage adult population with non-mortgage debt or behind with bills

Great Britain, July 2010 to December 2016

%

July 2010 to June 2012

July 2012 to June 2014

July 2014 to June 2016

July 2016 to Dec 2016

Heavy burden

11

11

9

7

Somewhat of a burden

23

22

21

19

Not a problem at all

66

66

70

73

Source: ONS, Wealth and Assets Survey (Preliminary Results)

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.