Households Turn to Loans to Keep Afloat!

by Mark Johnston

                                 Households Turn to Loans to Keep Afloat!

It seems that currently many families are facing financial meltdown living in today’s Austerity Britain.

In these tough economic times many households are now finding that their regular monthly bills are rising faster than ever and putting a real strain on incomes and finances.

Some experts feel that it is shocking that seven in ten families in the UK today are living on the edge, feeling there is little more they can do to make ends meet and fearful of the future. It seems that family finances are so strained that any more pressure could turn this crisis in to a catastrophe for the nation. 

Therefore it comes as no surprise that around a  quarter of families are living on credit cards, around five per cent take out payday loans and one in 100 have even  turned to loan sharks to stay afloat.

According to The Telegraph newspaper, almost half of all workers in theUKborrow money every month just to make ends meet they take on more than £300 a month on average.

Experts have suggested that the average amount people in work are borrowing has increased sharply since earlier this year.

 In March this year, it was estimated that people borrowed around £127 to get by every month now this figure is estimated at £327 every month. That is a 157 per cent increase in borrowing in just a few months.

With this in mind Dave Prents, leader of Unison, criticised payday lenders and the high levels of interest charged on payday loans. He argued that “six out of 10 are using the money to pay their household bills or buy essentials” and he is therefore concerned that people need to borrow money just to get by.  

A recent study found almost two thirds of families have less money coming in than this time last year with 61 per cent short of money every week. Two in five families need an extra £20 a week to get by, a third need £50 and one in ten families would need an extra £100 each week to make ends meet.

However, Middle-income earners and poorer families are set to benefit most from the first rise in real income since the credit crunch struck, recent research suggests.

The Centre for Economics and Business Research (CEBR) predicts that families will enjoy an increase in income next year as the high inflation of the past four years recedes.

Real incomes for middle-income and poorer households have fallen every year since 2008 and are set to drop again this year by 0.2 per cent due to slow wage growth and high inflation.But a 0.5 per cent growth is expected for next year, and similar increases are predicted for 2014 and 2015.

This rise has been described as ‘heralding an end’ to what the Bank of England has described as a ‘ferocious’ squeeze on take-home pay.

Daniel Solomon, the Centre for Economics and Business Research (CEBR) economist said “conditions will still be tough, just slightly easier than before.”

 

 

 

 

 

 

 



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