Consumer borrowing up 17pc due to cost-of-living crisis
The number of adults in Great Britain who have borrowed via loans and credit cards due to the increased cost of living has risen by 17 per cent, according to a new debt and wellbeing survey.
The data from the Office for National Statistics revealed that more than a fifth of adults in Great Britain, which equates to 22 per cent or around 11.5 million people, have reported borrowing more money or using more credit than in the previous year.
The latest data looked at the period between 25 January and 5 February 2023, and marked an increase from 17 per cent compared with 19 to 30 January 2022.
Nearly a third (31 per cent) of those surveyed said they would be unable to afford an unexpected expense, and those borrowing more were more likely to report a high anxiety score.
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Despite the large increase in energy bills, the percentage of people falling into arrears seemed to remain relatively stable.
Around six per cent of adults said they were behind on their gas and electricity bills between 25 January and 5 February 2023, roughly the same as when asked in March 2022.
However, almost half of all adults (47 per cent) who have gas or electricity supplied to their home said they found it very, or somewhat, difficult to afford their bills between 25 January and 5 February 2023.
People’s expectations about their ability to save money had also reduced over the same period.
Between 25 January and 5 February 2023, more than four in 10 adults (42 per cent or around 22 million people) said they did not expect to save any money in the next 12 months. This was an increase from a third (36 per cent) of those surveyed between 19 and 30 January 2022.
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Commenting on the “precarious financial situation” faced by many consumers, Freedom Finance chief executive Emma Steeley highlighted the importance of shopping around for credit.
“Rising interest rates have also made borrowing more expensive with credit card rates at their highest level since before the millennium while personal loans are also at multi-year highs,” she said. “With the era of cheap money disappearing, the importance of consumers making good financial decisions is increasingly important.
“For consumers looking to take out a credit product like a personal loan, our message is simple: use all the technologies and tools at your disposal to shop around and secure a deal that suits your personal circumstances.”
Interactive Investor senior personal finance analyst Myron Jobson added: “While inflation is cooling, we are not out of the woods yet. As such, keeping on top of your financial wellbeing remains important. This might translate to doing an emergency budget, cutting down on non-essential spending and squirrelling away more money into a rainy-day fund if you can afford to do so. Be realistic and make sure your spending plan is achievable.”
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