The Insolvency Body, R3, reports that numbers of British adults struggling from payday to payday is lower than it has been in the last six years.
The survey of over 2,000 British adults suggests that 36% still struggle to payday, which is a considerable drop from the record high in May 2012. A joint record low of 39% of British adults say they are at least fairly worried about their current level of debts. Debt worries were last this low in January 2012.
The current low inflation, low interest rates and some real growth have helped personal finances improve considerably. The current levels of economic pessimism and debt worries are at a record low. Although personal insolvencies have fallen back to pre-recession levels, the numbers of individuals struggling with money are still much higher than before 2003.
- 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
- 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%).
- 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.
President of R3, 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.”