Family debt set to spiral

It has been suggested recently that family debt is set to spiral out of control over the next four years, with families expected to be struggling with average debts of around £84,000 per household. A report claims that the level of total household debt by 2015, including mortgages, loans, and credit cards, will reach an amazing £2,126 billion. For many this prediction is cause for concern given the difficult financial future that many people are already facing.

The documents were released by the government’s spending watchdog, the Office for Budget Responsibility. Over recent months this agency is said to have significantly increased its predictions when it comes to the size and level of household debt in Britain. At present the debt level stands at £1,628 billion but it is predicted that this will increase every year until the end of parliament in 2015.

The Office of Budget Responsibility has said that part of the reason for this increased forecast when it comes to household debt is the austerity drive from the government, which is set to have a huge impact on families and households, affecting their finances hugely. In June of last year the prediction was that household debt would stand at £1,823 billion by 2015.

There are concerns that as a result of the government cutbacks, the soaring cost of living, and wage freezes or cuts, many families will have no other option but to increase their debts in order to keep their heads above water, but their ability to do this and to repay their debts will eventually run out, leaving them in a very difficult financial situation.

Labour’s treasury spokesman David Hanson said: ‘Hard-pressed families will have to borrow more money to deal with the effect of George Osborne’s tax and benefits squeeze.’

Tags: financial, Cost of living, government cutbacks, option, Business Finance, situation, credit, debt level

Britons using savings to ease cost of living raise

An increasing number of Britons are being forced to raid their savings to keep on top of a rise in the cost of living, new research has shown.

According to the Birmingham Midshires Saving Britain report, the average consumer has been forced to withdraw £400 from their savings in the past three months, a rise of 14 per cent on the comparative figures for the tail end of 2006.

The statistics suggest that Londoners were the most likely to turn to their rainy day funds and that northerners were the least likely.

And the over 50s were the age group most in need of the saviour of savings – taking four times more from their back up accounts than the over 30s

Urging Britons to take advantage of the financial climate to make more savings, Jason Robinson, director of savings operations at Birmingham Midshires, said: “While homeowners are feeling the pressures following Bank of England rate decisions, there has never been a better time for people to put away their money.

“Interest rates at a six-year high mean great returns for savers, whatever amount you can afford to put away.”

Previous research conducted by Birmingham Midshires found that almost a quarter of Britons had dipped into their savings accounts between July and September 2006.

Tags: england, average consumer, rainy, Midshires, tail end