A financial capability charity has warned that the finances of huge numbers of individuals and families were in dire straits, even before the impact of the ongoing coronavirus pandemic.
The Money Charity said its Money Statistics for March 2020 provide worrying snapshot of a country “on the eve of a crisis”. The majority of numbers collected for that snapshot included figures from January and February and obviously do not therefore capture the “massive changes” to GDP, pay, employment, debt, and government spending that have rapidly taken place since then, the charity said.
A spokesman for the Money Charity said that Britain went into the current situation with £1.45 trillion in mortgage debt, up from £500bn in 2000. For every adult in the UK there is an average of £4,264 in unsecured debt and the UK holds £72bn in credit card debt, the spokesman said.
He warned that a significant proportion of that credit card debt is deemed “persistent” by the Financial Conduct Authority in need of “sustained reduction”.
The charity said that in a crisis many will think firs of their savings as a backup but warned that 12.8 million households either have no savings at all or less than £1,500, “nowhere near enough” for most people to support themselves through a sudden loss of income.
The Money Charity said that 4.8 million people live without at least one essential household item, such as a fridge, freezer, cooker or washing machine, and now face a domestic lockdown which will only further exacerbate this.
The spokesman said: “In short, the big financial question for the UK, particularly all those involved in key decision making for society, will be: ‘did we build an economic framework that enabled people to be as resilient as possible to life’s unexpected events?’ And, perhaps even more importantly, ‘what could we do better next time?'”
2.8 million households either have no savings
at all or less than £1,500
The number of people unemployed in the UK grew
by 14 per day in the year to January 2020
It costs an average of £22.92 per day to raise
a child from birth to the age of 18
The UK population grew by an estimated 1,083
people a day between 2017 and 2018
Source: The Money Charity
Paul Frost, Interim Chief Executive of The Money Charity, added: “An essential part of our financial wellbeing and financial education work is our emphasis on the importance of people planning ahead, budgeting robustly, having a financial buffer if at all possible, and keeping debts to manageable sustainable levels, so they are in the best possible position to cope with both the expected and unexpected.
“As the UK’s statistics heading into the COVID-19 crisis amply demonstrate, these messages are both difficult to bring to enough people’s attention and often hard for them to implement.
“This amplifies the pressing need for increasing the availability of effective financial wellbeing interventions to all sections of society, and in particular the vulnerable.”