Economic pessimism hits record low

William-Ballmann

Just 16% of British adults expect their personal finances to get worse in the next six months, according to a long-running poll of British adults by ComRes and R3, the insolvency trade body. In Yorkshire and the Humber, the figure is 18%, only slightly higher than the national average.

By comparison, 26% of British adults expect their finances to improve – the third highest proportion on record. In Yorkshire and the Humber, optimism is slightly lower at 24%. Across the UK, this is the biggest ‘lead’ economic optimists have had over the pessimists since July 2010.

William Ballmann, chair of R3 in Yorkshire and partner at national law firm Gateley LLP says: “The improving economy is finally starting to affect how British adults see their own personal finances. It’s taken a while, but the personal finance picture is finally looking up after years in the doldrums.

“However, the number of people with debt worries or repeated financial struggles remains a source of concern.”

Debt worries remain high

Despite the improving economic optimism, 40% of adults in Yorkshire and the Humber say they are worried about their debts, slightly lower than the national figure of 46%. In the region, 47% say they often or sometimes struggle to payday, higher than the UK-wide average of 41%.

In Yorkshire and the Humber, credit card debts are the most common cause for debt worries, while the rising cost of living (food, energy, transport) is most frequently blamed by those who struggle to make it to payday.

Mr Ballmann adds: “Despite increasing economic optimism, there is a group of people who consistently struggle from week-to-week or month-to-month.

“Although falling inflation should ease cost of living problems, relief is only coming after years of prices rising far faster than wages. It will take a while before families can regain some financial breathing room.

“Given the sizeable number of people already worried about their debts, it’s a concern that the Office of

Budget Responsibility expects the gross household debt to income ratio to exceed 170% by 2020. Such high levels of debt are not always sustainable. According to the research, 5% of British adults are currently in some sort of debt management plan.”

Across the UK, of those who are ‘extremely worried’ about their debts, 79% say they also struggle to payday. Three-in-ten (29%) of those ‘extremely worried’ about their debts say they are likely to seek a payday loan in the next six months.

Mr Ballmann adds: “It’s all too easy for financially vulnerable people to get caught in a debt trap where debt is needed to finance other debts, leading to a vicious cycle from which it is very difficult to break out of without help.”

The research also found that:

47%of British adults worried about their debts are worried about credit card debt, followed by mortgage repayments(24%),overdrafts(20%), and loans from family or friends(14%).

All age groups are more optimistic than pessimistic about their personal finances except for those aged 45-54(22% optimistic; 23% pessimistic).

23%of British adults don’t have any savings at the moment.

2%of British adults have taken out a payday loan in the last six months – this is the first time in the Personal Debt Snapshot that this proportion has not been higher than the share of British adults who have taken out a credit union loan in the last six months (also 2%).

8%of British adults say they are likely to take out a payday loan in the next six months.

52%of British adults who struggle to payday blame the rising cost of food,39%blame rising household energy costs,29%blame rising fuel or transport costs,29%blame credit card repayments, and 25% blame rent.