A report from the national money education charity, Credit Action
It is a well publicised fact that Britain today is a nation of borrowers. We borrow to buy essential items like houses, cars and household appliances, and we borrow to fuel our lifestyles – buying holidays, clothes and the latest gadget. All this has contributed to the UK becoming responsible for a third of all the consumer debt held in Europe with total borrowing topping £1.3 trillion pounds in January. However most of the figures involved here are so mind boggling that we cannot really get our heads round them.
To simplify, one of the partners on Moneybasics, Credit Action – who compile monthly debt statistics – have broken the figures down to a manageable level so that we can see what is happening on a daily basis; 24 hours in buy now, pay later Britain.
Today in the UK consumers will borrow £360 million. Of this amount, £324 million pounds will be secured borrowing such as mortgages and £36 million pounds will be unsecured, borrowed mainly on credit cards, store cards, loans, overdrafts. This means that if the amount borrowed was spread evenly across every man, woman and child in the UK that by the end of today we will all owe £5.94 more than we did at the start.
For the majority of people their borrowing will not be an issue however, for a very sizable minority of people debt becomes a real problem. In the next 24 hours 300 people will be declared insolvent and 5,300 people will seek advice on debt problems. This is clearly a substantial number of people to be struggling financially on a daily basis. If you’re worried about debt MoneyBasics provides information on where you can go for help here.
More and more people are also struggling to pay off their mortgages, a particular issue in a time of rising interest rates and rising house prices. In the next 24 hours the average house price will rise by £40. As more people struggle to pay their mortgage more repossessions take place. Currently 289 possessions actions are initiated on a daily basis. MoneyBasics provides information on mortgages here.
As more and more of us switch to paying with debit and credit cards our daily use of plastic continues to grow rapidly. Every day 24.3 million plastic transactions take place, 7.4 million withdrawals made from the UK’s 58,000 cash machines. £471.3 million will be taken out of cash machines today.
We are all borrowing more and using the hole in wall more every day to afford things as the cost of living rises. To run a car in the UK now costs £15 a day and raising a child to the age of 21 in Britain will now set you back £23.50 daily(1).
This is the situation as we speak, however Britain’s thirst for debt shows no sign of abating. The Council of Mortgage lenders estimates that by the end of 2007 £1bn a day could be being lent in mortgages.
Chris Tapp, the Associate Director of Credit Action comments, “Day by day in the UK we now borrow and spend at an astonishing rate, it is such a key part of our everyday life. However there are real risks associated with this pattern as the numbers of people falling into difficulty on a daily basis shows. We need to make sure that we are thinking very carefully to ensure that the money we are borrowing for today, we can afford to pay pack tomorrow.”
Credit Action is also worried about the lack of savings being built up at a time when so much is being spent. Half of all of us in Britain have less than 2 months salary tucked away and 1 in 3 admit that they saved nothing at all during 2006(2). MoneyBasics provides more information on savings here.
Chris Tapp has this advice, “Having savings is vital to ensure that should there be a change in personal circumstances or the wider economic situation tomorrow, there is a financial safety net. Today would be a great day to do something about securing your financial future!”
1 Cost of raising children figure from Liverpool Victoria
2 Figure from Alliance & Leicester
For more information contact Chris Tapp on 0207 636 5214 or at firstname.lastname@example.org.