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How Much does the UK Really Owe in Debt?

Interest-Rates / UK Debt Sep 02, 2018 - 01:02 PM GMT

By: Dylan_Moran

Interest-Rates We all hear horror stories about debt and how it’s piling up, but few people know the actual numbers. They’re left wondering how much the UK really owes in debt. Those figures don’t look good. In fact, it’s fair to say that the average Brit owes more than they ever have.

British households were spending around an average of £900 more than they earned during 2017, pushing personal debt into a deficit not seen since the credit boom of the 1980s.




The Office For National Statistics put an actual number on the problem; estimating the shortfall was worth around £25 billion – almost a quarter of the entire budget for the NHS – and that this overspend was generally paid for with borrowed money. Some houses are paying off the extra money with their savings, but it doesn’t change they are spending more than they have.

The figures could prove challenging for the government, which was warned just last year that the consumer credit bubble of over £200 billion was completely unsustainable. This dramatic increase in debt-fuelled spending – which has been happening since 2016 – also has the unfortunate timing of taking place against the Brexit vote, which saw inflation rise during a time of weak wage growth.

Analysts have warned that household incomes being further squeezed by benefit cuts, high inflation, and low wages could force people to borrow money just to pay for their basic bills. Ministers are facing a challenge in building financial resilience for the UK, and individuals are facing a challenge in tackling rising debt.

If you currently find yourself in severe debt you are struggling to repay, then you should consider contacting National Debt Relief. They are an organization dedicated to helping relieve debt for those with debt-related problems. Check out National Debt Relief reviews to learn more.

Researchers from the Office of National Statistics have said the situation is worse than at any time on record since the £25 billion deficit of last year surpassed the £300 million deficit from 1988. British household finances have also gone from being one of the most solvent during the 1990s to being among the most indebted households in the western world.

A report published by the ONS entitled “Making Ends Meet; Are Households Living Beyond their Means?” Showed that the deficit among UK houses, which is equivalent to 1.2% of GDP, contrasted the surplus in France equivalent to 2.7% of GDP and the surplus equivalent to 5.1% in Germany.

The official data from last year showed that unsecured credit – such as credit cards and payday loans – reached a record high of over £250 billion, while the consultancy firm PwC suggested their own measures showed consumer debts were reaching above £300 billion.

The ONS said that households took on around £80 billion in loans during 2017, the most for over a decade. Even so, those same households deposited only £37 billion with UK banks, the least since 2011. Households were building more debt than they were getting from assets even after including assets in shares, bonds, and pensions.

Anti-poverty charities have warned that the people most affected by all of this will be the millions of people in low income households. One such charity – StepChange – have even criticized the ONS for the language they used in the report. They believe that saying households are living above their means suggests that these people can cut back and get out of debt if they had a mind to.

StepChange say that the reality of the situation is that too many British households are not able to make ends meet no matter how hard they try. They take on debt in order to pay off their basic bills and that not having enough money to actually make ends meet was different than living above one’s means.

ONS statistics show that the poorest 10% of households were spending an average of two and a half times their disposable income for the financial year ending 2017. On the other hand, the richest 10% of households were spending less than their available income for that time.

The ONS said that an increase in interest rates could encourage people to save more and will improve household finances, but StepChange believe that those already having to borrow money just to get by will be unable to afford to save their money no matter what.

By Dylan M.

© 2018 Copyright Dylan M. - All Rights Reserved Disclaimer: This is a Paid Advertorial. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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