Consumer debt rises, but most UK adults aren’t worried
ALMOST two thirds of UK adults said they were able to meet credit commitments without any difficulty in the second half of last year, an improvement on the previous four years, official figures have shown.
The Office for National Statistics’ (ONS) wealth and assets survey revealed that 63 per cent of the population had no problem paying off their debts between July and December last year, up from 59 per cent in July 2014 to June 2016 and 52 per cent in the period from July 2010 to July 2014.
Just one per cent of respondents said they were falling behind with many repayments in the second half of 2016, while two per cent said they were falling behind with some.
And 73 per cent of adults think their non-mortgage debt is not a problem at all, with 19 per cent saying it is somewhat of a burden.
The results of the survey contrasts with the Bank of England’s latest financial stability report, released on Tuesday, which warns of a consumer credit boom that needs to be addressed.
Jo Darbyshire, commercial director at funeral planner Avalon, said that increasingly challenging macroeconomic conditions mean that consumers should not get complacent.
“2016 was a year filled with economic uncertainty, coupled with low interest rates and rising inflation, so the fact that UK consumers are finding increasing ways to manage their money, keep up with bills and payments and tackle debt is promising news,” she said.
“However, household finances are likely to continue to be squeezed over the coming months, and as such it’s more important than ever to save for the long term, not to just get by day-to-day.
“Taking a bit of time to look at overall outgoings will help to keep spending in check, allowing you monitor what you can immediately afford and how much you can put aside each month. Regular, small amounts make a real difference, and ultimately you will have peace of mind that you have something to fall back on when it matters.”
The ONS survey also found that the working population still sees employer pension schemes as the best way to save for retirement (38 per cent), followed by property investments (29 per cent). Seven per cent see ISAs as the best way to safeguard their financial situation later in life, while just one per cent think stocks and shares are the optimum choice.
In terms of income during retirement, 86 per cent of non-retired adults are planning to rely on the state pension, despite increasing age hikes and proposed cuts.
68 per cent are expecting to delve into personal pensions and 46 per cent are planning to rely on savings and investments.