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Debt crisis warning as UK reports steep rise in emergency borrowing 

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Debt crisis warning as UK reports steep rise in emergency borrowing 



"Britain is “sleepwalking into a debt crisis” after a steep rise in emergency borrowing by low- and middle-income households to cope with the Covid-19 jobs crisis.

Research by the debt charity Stepchange found that household borrowing and arrears linked to the coronavirus pandemic have soared 66% since May to £10.3bn. The number of people who are in severe debt has risen to 1.2 million – nearly doubling since March – with a further 3 million people at risk of falling into arrears after taking on extra short-term loans.

Phil Andrew, the charity’s chief executive, said: “This report paints a picture of a nation sleepwalking into a debt crisis. Despite a bold initial reaction to the pandemic, the government and financial services sector’s toolkit of responses has not evolved, and the result is a spiralling number of people being plunged into debt due to Covid-19. And the worst is yet to come.”

With official figures showing the number of people made redundant rising steeply, many MPs are concerned the pandemic has devastated the finances of many vulnerable households. A report last month by a parliamentary committee laid part of the blame on the the universal credit (UC) system, which it said pushed many families into the arms of payday lenders because initial payments take five weeks to arrive."


......"Stepchange said that among this group, 7.1 million had fallen behind on utility and council tax payments or borrowed to make ends meet, averaging £1,365 arrears and £1,577 in debt for each adult affected.

“Worryingly, the safety nets in place for those affected by coronavirus are not proving effective,” said the report. “Of those who have made an application for universal credit since March, 24% are in severe problem debt and 28% are showing signs of financial difficulty.”....

Edited by Saving For a Space Ship
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