Abacus Daily Debt News

Unemployment in the UK remains at over eight per cent of the working population, despite a second successive monthly fall.

The three months to the end of March saw a fall of 45,000 in the number out of work, to 2.63 million, or 8.2 per cent of the population, while the proportion of the population aged 16-64 in work rose by 0.2 per cent to 70.5 per cent.

But this still means large numbers of people who have debts are likely to be out of work and finding it hard if not impossible to pay these.

And individuals struggling to make ends meet who are in work are seeing their pay increasingly falling behind inflation.

Total pay including bonuses only rose by 0.6 per cent in the three months to March, the lowest figure since the March-May 2009 period, while pay excluding bonuses rose 1.6 per cent, the same as in the three months to February.

And this gap may grow further, as a survey by Legal and General published this week found 88 per cent of consumers expect inflation to either remain as high as it is now or rise over the coming 12 months.

By James Francis

The pressure on consumers struggling to pay off their debt is set to rise because of increasing inflation.

This is the prediction of Legal and General, which said it expects the Bank of England to forecast the cost of living to increase again when it releases its Quarterly Inflation Report next week.

According to the insurance firm, this is not surprising as 88 per cent of respondents to its latest Moneymood Survey indicated they expect the level of inflation to be the same or higher over the next 12 months than it is now.

Another survey finding was that 57 per cent expect their earnings to rise by less than prices over the next year.

Executive director for savings at the firm Mark Gregory remarked: "Over 11 million households are likely to find they are struggling to pay the bills as their household finances come under continued pressure during the coming months."

Earlier this month, Bank of England governor Mervyn King commented that Britons are significantly worse off" than was the case four years ago.

By Joe White

Britons who run short of cash before payday are likely to pile up credit card debt as a means of making ends meet, a new survey has shown.

Plastic, overdrafts and dipping into savings are the top three methods used of accessing extra cash when money runs short, a MoneySupermarket study has revealed.

A quarter turned to cards, which could leave some piling up interest if this is a regular method of making ends meet.

Those in such a situation could benefit from a debt management plan to get their finances under control.

Head of banking at the website Kevin Mountford also said more careful budgeting can help.

He commented: "Reviewing your personal finances to see where savings can be made can help you release vital cash which can help alleviate the financial pressure."

Bank of England figures in March showed net credit card lending rose £0.2 billion, whereas the previous three months had seen this figure fall or remain static.

By Amy White
 

The UK economy is growing again - but only just.

In the three months to April, gross domestic product increased by 0.1 per cent, according to a study by the National Institute of economic and Social Research (NIESR).

The figures are unofficial, but the organisation said they represented an end to a brief recession, following the official figures estimating a 0.2 per cent fall in output in the first quarter of this year.

However, this still represents very slow growth and at current rates the UK is not likely to pass its 2008 level of economic output until 2014, the NIESR concluded, suggesting substantial growth will not emerge until 2013.

This could mean it is along time before those in debt can expect to get many opportunities to improve their financial situation through obtaining new and better-paid jobs.

For people who are struggling, a debt management plan may therefore be the best solution.

The economic crisis has meant Britons are "significantly worse off than we were four years ago", Bank of England governor Mervyn King recently stated.

By James Francis
 

Families are set to get poorer due to ongoing austerity measures and nothing announced in the Queen's Speech will change this, the Child Poverty Action Group (CPAG) has said.

CPAG chief executive Alison Garnham said the statement that the government is focusing more on families is "positive".

However, she added: "There's little here that will make life easier for families or make good the losses family budgets have suffered through massive cuts to help for the working poor and those unable to find work."

She argued that measures such as the introduction of the universal benefit will hit disabled children and their families by around £1,400 a year on average.

Without improvements in their financial circumstances, such households may face increasing debt problems.

Consumers could also suffer a financial blow from new banking regulations proposed in the Queen's Speech, according to Moneysupermarket.com.

It suggested new banking regulations will reduce risk in the high street banking sector, but requirements that they hold more capital will increase their costs and head of banking at the site Kevin Mountford warned such costs are likely to be passed on to customers.

By Joe White
 

Consumers in the south may tend to earn more on average than in the north - but they could also struggle more with debt due to higher prices.

A Daily Mail study has found all sorts of goods and services cost more in southern areas than in northern ones.

Comparing the prices in Hammersmith, west London, with those in Hull, it found people in the capital will pay more for everything from a sausage roll at Greggs or a burger in McDonalds to cinema tickets, hotel stays and gym club membership.

While London weighting means the typical public sector salary is 50 per cent higher in Hammersmith, the typical house price is 417 per cent more.

Londoners who rent may find they have particular problems.

FindaProperty.com's Rental Index found that the typical rental figure per home in Britain is £868 per month - or 38 per cent of income.

However, in the capital the cost is 71 per cent of income due to much more expensive housing costs.

By Amy White
 

Debt and the general strain of falling incomes on consumers  is manifesting itself in bad food choices as people opt for cheap products instead of healthy ones.

This is the conclusion of a study by Prudential, which has found 22 per cent of shoppers are eating less healthily because of the rising cost of living.

Its research found 75 per cent of Britons have changed their eating habits since the recession of 2008-09 began, with 68 per cent saying healthier foods are more expensive.

One in six focus on the reduced-to-clear sections in supermarkets and 11 per cent only buy foods on special offer.

And half as many people seek to improve their diet with healthier foods than four years ago.

Head of clinical health at PruHealth Dr Dawn Richards said: "People are only too well aware of the need to eat healthily, but financial constraints are making it difficult, resulting in people's health being negatively affected."

Another area where consumers have trimmed spending is on DIY, with Lloyds TSB revealing this has fallen to its lowest level in 15 years.

By James Francis
 

Britons are "significantly worse off than we were four years ago", Bank of England governor Mervyn King has said.

Speaking in the 2012 BBC Today Programme Lecture, Mr King admitted that the central bank failed to spot how British financial services providers were lending money too freely and easily in the 2000s and operating in an unsustainable way.

He described the onset of the credit crunch in August 2007 as "the moment when financial markets began to realise that the emperor had no clothes".

And while the Bank had been stripped of its responsibility for regulation after 1997, it should still have "shouted from the rooftops" about the dangers building up in the financial sector.

Consumers now faced with major debt management problems could seek individual voluntary arrangements if the amount they owe is £15,000 or more.

These were taken out by more than 49,000 individuals in England and Wales last year, with this bringing about reduced monthly payments and limiting the time period on them to five years or less, after which anything left owing is paid off as long as the new schedule of payments has been maintained.

By James Francis

UK consumers took on more new credit card debt in March than in recent months, new data has shown.

Bank of England Trends in Lending figures have revealed lending to individuals £1.4 billion, of which the unsecured share was an extra £0.4 billion.

This was upon the six-month average of £0.3 billion and included £0.2 billion rises for both credit cards and the 'loans and other advances' category.

By contrast, the previous three months saw credit card borrowing either slightly in decline or static.

Consumers who borrow too much on their cards may need a debt management plan to help get their repayments under control, as allowing interest to pile up on these through only paying the minimum amount can leave larger bills in the long run.

People getting into trouble with difficulty may find they are increasingly being chased by debt collection agencies.
  
Data supplied by the Credit Services Association recently showed that the amount of debt being sought by such organisations rose by £6 billion to £58 billion in the second half of 2011.

By Joe White

Pocket money could be useful in helping children learn how to use money wisely.

Parenting writer and author of Raising Children: The Primary Years Liat Hughes Joshi suggested giving youngsters cash in such a way is a "fantastic" method of teaching them how to handle finances.

Even small sums like 50p to £1 a week will help do this, the writer commented.

She added: "When kids are a bit older - into their teens - encouraging them to earn a bit of money for themselves will also help with their financial education."

Adults who have not had this sort of structured upbringing and learned the value of money may be more likely to need debt help.

A study by Legal and General backs the view that 50p or £1 may be seen as a lot of money by kids, with a poll of six-year-olds by Legal and General revealing that half expect to pay under £10,000 for their first house and believe their annual pay will be £100 a year on average.

By Amy White