Debt is a fact of life for many people and families and arguably never more so than now. There was already a debt crisis before the Covid pandemic struck and the resulting job losses, reductions in income and insecure employment will mean that many people will have little or nothing to fall back on in these difficult economic times. Added to this increases in the cost of living particularly for essentials such as food and energy and changes to social security benefits put substantial pressure on already stretched household budgets. Many people particularly those on low incomes with little or no savings will have no other option than to borrow money often for essential items. Increasing levels of debt give cause for concern not only in terms of the ability of people to manage these debts but also for the negative impacts on their health and wellbeing and the impact on local economies.
People in the UK owed £1,805.7 billion at the end of June 2022 up by £62.5 billion from the end of June 2021, an extra £1,181.21 per UK adult over the year. The average total debt per household, including mortgages, was £64,970 and per adult was £34,140. The Office for Budget Responsibility have forecast that household debt of all types is forecast to rise from £2,019 billion in 2020 to £2,447 billion in 2025 making the average household debt £85,906.
In terms of debt levels Northern Ireland does not fare well compared to other regions. Research by the Financial Conduct Authority (FCA) has shown that personal debt in Northern Ireland (excluding mortgages) is higher than any other part of the UK. Figures for unsecured debt show adults in Northern Ireland owe £3,990 on average and adults with debts owe £10,730 on average. The financial circumstances of the Northern Ireland population (pre-pandemic) also give cause for concern. FCA research shows that fewer adults in Northern Ireland have a savings account (52% compared to 59% in the UK) and fewer have any investment product (23% compared to 29% in the UK). In Northern Ireland 12% of adults have no savings or investments while 60% have savings and investments of less than £10,000 (compared to 49% in the UK).
A greater proportion of people in Northern Ireland (56%) are considered potentially vulnerable due to their financial circumstances (compared to the UK average of 50%). 8% of adults in Northern Ireland said they could cover their living expenses for less than a week if they lost their main source of household income and 20% reported being over-indebted, both of which are characteristics of potential vulnerability.
This article is an excerpt from our Women Living with Debt research.