On the eve of the Budget, UK individuals now owe as much as the entire country produced in 2011, writes Dick Skellington
The findings, from the money education charity Credit Action, show that despite UK households succeeding in reducing their unsecured debts (excluding mortgages) by £355 in 2011 – the third year the debt has fallen – UK consumers have made only a very small dent in the total levels of borrowing, and worse, confidence in the future is affecting consumer ability to repay their debts in the future.
Each UK adult now owes, if mortgages are included, £29,634 in January 2012. This is 122 per cent higher than average earnings (at around £26,000).
At the end of January 2012 the charity Credit Action estimated the outstanding UK personal debt to be £1.456 trillion, slightly higher than the £1.452 trillion in January 2011. Mortgage lending was also up from £1.240 trillion in January 2011 to £1.248 trillion in January 2012. Household debt excluding mortgages rose to £7,975 in January 2012, up from £7,951 in December 2011.
Based on January 2012 trends, the UK's total interest repayments on personal debt over a 12-month period would have been £63.2 billion.
Of all debt reported to the Consumer Credit Counselling Service last year, 43 per cent was credit card related. People who asked for help with their unsecured credit card debts owed over £11,000 on average. On average Credit Action estimate that UK households will pay over £2,400 in annual interest repayments in 2011.
The Government’s Office for Budget Responsibility predicts that by the first quarter of 2017 total UK household debt will have reached an astonishing £2,045 trillion This suggests that the Government confidently believes that average household debt will have reached an astonishing £78,669, assuming the number of UK households is similar to what it is today)
Credit Action estimate that each day in the UK:
* The Government's Public Sector Net Debt (including financial interventions) will grow by an average of £212.1 million today, equivalent to £2,454 per second (based on January 2012 data).
* The Government pays an estimated £137.75 million of interest each day on the UK's Public Sector Net Debt of £2311.6 billion (including financial interventions).
* 318 people are declared insolvent or bankrupt (based on Q4 2011 trends – that is, trends in the final quarter of 2011). This is equivalent to 1 person every 62 seconds during each working day.
* 1,473 Consumer County Court Judgements (CCJs) are issued every day (based on Q4 2011 trends). The average value of a Consumer CCJ in Q4 2011 was £2,949.
* Citizens Advice Bureaux in England and Wales dealt with 8,652 new debt problems every working day during the year ending September 2011.
* It costs an average of £28.44 per day to raise a child from birth to the age of 21.
* 93 properties are repossessed every day (based on Q4 2011 trends).
* 82 new people a day became unemployed for over 12 months during the year ending December 2011.
* 1,797 people a day reported they had become redundant between October and December 2011.
* 196 mortgage possession claims are issued and 149 mortgage possession orders are made every day
* 388 landlord possession claims are issued and 275 landlord possession orders are made every day.
* 25.9m plastic card purchase transactions were made every day in December 2011 with a total value of £1.222 billion.
* 8.0m cash withdrawals will be made daily with a total value of £531m (based on Q3 2011 trends).
To rub in the economic problems faced by UK households, a week after the Credit Action report the Centre for Economics and Business Research (CEBR) revealed UK households were more than £2,000 a year worse off than they were in 2007 – a fall of 5.7 per cent – and they now face a third successive year of falling disposable incomes, largely due to a rise in commodity costs, the high price of oil and changes in Government welfare policy. CEBR report the fall in income adds up to the equivalent of a cut of £2,210 over the full six-year period. It is therefore hardly surprising little progress is being made in reducing household debt.
It will be fascinating to see if this week's Budget makes it even more difficult for individual households to pay off their debt and whether it will create the conditions for further increased borrowing simply for low income households simply to pay utility and food bills. If the rumours are right, and Chancellor George Osborne does cut national public sector pay in some of Britain's poorest regions as forecast over the weekend then the UK debt mountain is likely to rise while inequality in the UK, widening under the Coalition Government, will widen further, raising the prospect of industrial action on two fronts, pay and pensions.
Dick Skellington 19 March 2012
Cartoon by Gary Edwards
