The past few years have been very tough for households on low to middle incomes. As we reported, over-indebtedness (the proportion of households spending 25% or more of their income on unsecured debt repayments) increased between 2012 and the end of 2014. Many households have been placed under considerable financial pressure due to a lack of real wage growth, welfare cuts, and the rising cost of essentials, especially housing and childcare. The number of over-indebted households increased by 28% to 3.2 million (one in eight of all households). Since then, there has been a slight improvement in real wages, but the most recent survey data released by the Bank of England shows that this has had little impact on over-indebtedness. During 2015, the total number of over-indebted households reduced by just 1% and there has also been an increase in over-indebtedness among working households with incomes of £30,000 or less per year. … (To read the full article, subscribe below)
Damon Gibbons is director of the Centre for Responsible Credit.
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