• Outstanding personal debt stood at £1.451 trillion at the end of December 2011.
   
• This is down from £1.454 trillion at the end of December 2010. Individuals owed nearly as much as the entire country produced in the four quarters between Q4 2010 and Q3 2011.
   
• Outstanding secured (mortgage) lending stood at £1.245 trillion at the end of December 2011. This is up from £1.238 trillion at the end of December 2010.
   
• Outstanding unsecured (consumer credit) lending stood at £207 billion at the end of December 2011. This is down from £216 billion at the end of December 2010.
   
• Average household debt in the UK (excluding mortgages) was £7,948 in December. This is down from a revised £7,972 in November.
   
• Average household debt in the UK (including mortgages) was £55,823 in December. This is up from a revised £55,818 in November.
   
• The average amount owed per UK adult (including mortgages) was £29,547 in December. This was around 122% of average earnings.

Every Day in the UK

• 331 people are declared insolvent or bankrupt every day (based on Q3 2011 trends). This is equivalent to 1 person every 60 seconds during each working day.
• 1,779 Consumer County Court Judgements (CCJs) are issued every day (based on Q3 2011 trends). The average value of a CCJ in Q3 2011 was £2,816.
• Citizens Advice Bureaux in England and Wales dealt with 8,652 new debt problems every working day during the year ending September 2011.
• It costs an average of £28.44 per day to raise a child from birth to the age of 21.
• 101 properties are repossessed every day (based on Q3 2011 trends).

68 new people a day became unemployed for over 12 months during the year ending November 2011.

Source: www.creditaction.org.uk

The debt charity, the Consumer Credit Counselling Service, said households in Northern Ireland are among the most financially vulnerable in the UK.  It said a third have little money left at the end of the month.

Delroy Corinaldi from the service said: “The vulnerability of many Northern Ireland households to financial shocks in the future means that personal debt problems in the region could increase dramatically.”

Financial stocks

The report said in recent years, Northern Ireland had seen the fastest growth in demand for debt advice in the UK, with the number of people counselled rising by 80% in the two years to 2010.

The report also concluded that households in Northern Ireland were particularly vulnerable to future financial shocks.  Only 29% of people in Northern Ireland have a savings account and only 15% have an ISA – the lowest proportions of any region in the UK.

It said Northern Ireland households had barely any cushion against unforeseen financial events, with the average household estimated to spend as much as 97% of their weekly income – the highest spending ratio in the UK.

Source:  www.bbc.co.uk

As figures showed the economy shrank by 0.2 per cent in the last three months of 2011, the Deputy Prime Minister will demand that income tax for basic rate taxpayers is slashed so that the first £10,000 in earnings is tax-free.

‘The pressure on family finances is reaching boiling point,’ he will say.

‘Cutting income tax is one of the most direct tools we have to ease the burden on low and middle earners.’

The Liberal Democrat leader will also call for the rich to pay more to fund tax breaks for struggling families.

The Deputy Prime Minister’s intervention comes after statistics showed Britain has endured the slowest recovery from recession since the Great Depression.

The Chancellor yesterday blamed the eurozone crisis, as well as the squeeze on family budgets thanks to high food and fuel prices, for figures showing a ‘disappointing’ 0.2 per cent fall in GDP in the three months to December.

If the economy shrinks further in this quarter, Britain will be in a ‘double dip’ recession, the first since the mid-1970s.

Source: www.thisismoney.co.uk

Typical incomes increase over the past year: 

The typical monthly net income for families in the UK is now £2,066, an increase of 7% in the last year (January 2011 – £1,937). However, not all family groups have seen an increase in their year-on-year monthly incomes and divorced/separated/widowed parents saw their monthly income fall significantly by 22% over this period from £1,387 (January 2011) to £1,075 (January 2012).

The most common source for families’ income remains the salary from a primary earner (69% – January 2012). However, this has fallen steadily over the past six months from a high of 72% in August 2011 to 70% in November 2011, suggesting that unemployment among families is on the increase.

Typical amount held in debt increases by 48% in the past year:

However, while the average family income has risen over the year, debts have also been on the increase. The typical family debt – excluding mortgages – has increased by 48% from £5,360 (January 2011) to £7,944 (January 2012) – 32% of the typical annual net household income (£24,792 – January 2012). This shows that families are building on their existing debts rather than clearing them.

Number of families saving nothing each month increases:

Families are saving slightly less each month than they were at this time last year. The typical amount saved on a monthly basis has fallen slightly from £22 (January 2011) to £21 (January 2012) – having peaked at £34 in August (2011). Furthermore, 42% of families are now saving nothing on a monthly basis (January 2012) compared to 40% in January 2011. 

However, the number of families with no savings set aside has fallen from 33% (January 2011) to 30% (January 2012), suggesting that most families are trying to build up some sort of cushion against unforeseen expenses. However, six out of 10 families are still without any form of protection insurance, which suggests that many are not fully prepared against the unexpected (see separate news release).

Families adjust to inflation:

Despite the impact of inflation over the past year, the average monthly family expenditure has remained steady over the past 12 months. Housing remains the single largest monthly expense for UK families at 20% of their typical monthly income (January 2012), followed by food (10%) and debt repayment (9%). The percentage of monthly income spent on food has stayed at a consistent level over the past year (10% – January 2011), indicating that although inflation on this item has increased (4.88%), families are planning their food shopping and searching out value brands.

This trend of economising has also seen families cutting back on their non-essential spending. A fifth (22%) of families (January 2012) claim they are not spending money on personal goods, while 30% say that they do not spend on entertainment/recreation/holidays, and 42% spend nothing on leisure goods.

The rising cost of living:

Over the next six months UK families are primarily concerned about the rising cost of living (62% January 2012), the threat of redundancy (46%), and meeting the cost of unexpected expenses (41%). One in ten (10%) is worried by the prospect of continued unemployment, meaning that those who have been out of work for a while are becoming less confident about their prospects of re-entering the workplace. This might also indicate that people are still very concerned by the economic situation, and do not believe that recovery or growth will come into play in the immediate future.

These same concerns also remain the most significant fears over the next five years, with the rising cost of living a concern for 61% of families (January 2012), followed by the threat of redundancy (51%) and unexpected expenses (39%).

Louise Colley, head of protection sales and marketing, Aviva says: “Families in the UK are still very concerned by the rising cost of living and levels of unemployment. While average incomes have increased over the past year, the prices of essential goods and services have also increased, meaning that families are struggling to keep up. Many appear to have acclimatised to this economic environment by shopping around and seeking to minimise their spending in certain areas. However, at the same time there are still a worrying number of families with insufficient savings or large debts.

“Although many families are trying to build a savings cushion, this report clearly demonstrates that they also need to consider a protection buffer – protecting themselves against those unexpected financial shocks, such as having a serious illness or worse still, a death. The impact of not having protection in place can be devastating at what is already a hugely difficult time. Around half of families say they are planning to get their finances in order in 2012, so for their peace of mind, we’d strongly urge them to put protection at the top of their list.”

Source: www.easierfinance.com

Research group Centre for Cities said the private sector’s struggle to create enough jobs to aid growth was “playing out very differently across UK cities”.  The gap in the claimant count rate between Hull and Cambridge had increased from 3.2% in February 2008 to 6.1% in November 2011, the report said.

Meanwhile, the area of Rochdale with the highest number of claimants had 30.3% of people on the benefit, while the area of Cambridge with the highest rate was 5.0%.  The report said that towns and cities with less dynamic private sectors, such as Hull, Doncaster and Newport, would find it more challenging to offset the weak national economy and the ongoing shrinkage of the public sector.

‘Tailored policy’

It said cities that had performed well, such as Edinburgh, Cambridge and London, all had strong private sectors, and high numbers of skilled residents and “knowledge workers” – those who work in professions such as law, accountancy and finance.  Cities that had performed well had high numbers of skilled residents.  It highlighted Milton Keynes and Aberdeen as well placed to drive the national economic recovery, as they had seen a large number of business start-ups and were highly innovative, with significant numbers of patents registered.

Last week, official figures showed the UK’s unemployment rate had risen to the highest level for 16 years.  “The gap between cities is widening,” said Alexandra Jones, chief executive of Centre for Cities.  “This makes it vital that government policy is tailored to meet the needs of each city rather than one-size-fits-all. What is right for Brighton and Reading will not be right for Dundee and Middlesbrough.”

The Local Government Association (LGA) said the report highlighted the differences in how towns and cities were dealing with the tough economic climate.  “Councils strongly support the premise that government policy must be tailored to meet the needs of each individual city,” said Peter Box, chairman of the LGA’s economy and transport board.

Source: www.bbc.co.uk

However, a similar proportion of people currently in work said they still expected a pay rise.  The survey comes just days after official figures showed the UK’s unemployment rate had risen to the highest level for 16 years.

On Thursday, the Nationwide Building society said that consumer confidence in the UK had fallen to “a low ebb” in December.  Figures on Friday showed that retail sales rose 0.6% in December after heavy discounting in shops in the run-up to Christmas. 

‘Real worry’

As well as planning to reduce spending, the Resolution Foundation said that more people were now saving. Those making monthly savings rose to 30% from 22% in October.  One in five said they could not afford a holiday this year.  “Families that are already hard-pressed are preparing for yet another very tough year ahead, with a big rise in the numbers planning to cut back spending as well as trying to save and reduce their debts,” said Gavin Kelly, the think tank’s chief executive.

“Given this gloomy backdrop it’s a real worry that a new round of cuts to tax credits planned for April will further dampen the spending power of low to middle-income families.  “The longer households cut back on spending, the longer it will be before we see real economic recovery.”  The survey of 1,993 people was carried out by Ipsos Mori on behalf of the Resolution Foundation.

Source:  www.bbc.co.uk

This is down from £1.455 trillion at the end of November 2010. Individuals owed nearly as much as the entire country produced in the four quarters between Q4 2010 and Q3 2011.

Outstanding secured (mortgage) lending stood at £1.244 trillion at the end of November 2011. This is up from £1.239 trillion at the end of November 2010.

Outstanding unsecured (consumer credit) lending stood at £208 billion at the end of November 2011.

This is down from £216 billion at the end of November 2010.

Average household debt in the UK (excluding mortgages) was £7,982 in November. This is down from a revised £7,995 in October.

Average household debt in the UK (including mortgages) was £55,816 in November. This is slightly up from a revised £55,815 in October. Average amount owed per UK adult (including mortgages) was £29,543 in
November. This was around 122% of average earnings.

Every Day in the UK

• Based on the latest available data, Credit Action estimates that every day in the UK: 331 people are declared insolvent or bankrupt every day (based on Q3 2011 trends). This is equivalent to 1 person every 60 seconds during each working day.
• 1,779 Consumer County Court Judgements (CCJs) are issued every day (based on Q3 2011 trends). The average value of a CCJ in Q3 2011 was £2,816.
• Citizens Advice Bureaux in England and Wales dealt with 8,652 new debt problems every working day during the year ending September 2011.
• It costs an average of £27.50 per day to raise a child from birth to the age of 21.
• 101 properties are repossessed every day (based on Q3 2011 trends).
• 88 new people a day became unemployed for over 12 months during the year ending October 2011.

1,764 people a day reported they had become redundant between August and October 2011 

January 2012

Outstanding personal debt stood at £1.451 trillion at the end of November 2011.

This is down from £1.455 trillion at the end of November 2010. Individuals owed nearly as much as the entire country produced in the four quarters between Q4 2010 and Q3 2011.

Outstanding secured (mortgage) lending stood at £1.244 trillion at the end of November 2011. This is up from £1.239 trillion at the end of November 2010.

Outstanding unsecured (consumer credit) lending stood at £208 billion at the end of November 2011.
This is down from £216 billion at the end of November 2010.

Average household debt in the UK (excluding mortgages) was £7,982 in November. This is down from a revised £7,995 in October.

Average household debt in the UK (including mortgages) was £55,816 in November. This is slightly up from a revised £55,815 in October. Average amount owed per UK adult (including mortgages) was £29,543 in
November. This was around 122% of average earnings.

Every Day in the UK

• Based on the latest available data, Credit Action estimates that every day in the UK: 331 people are declared insolvent or bankrupt every day (based on Q3 2011 trends). This is equivalent to 1 person every 60 seconds during each working day.
• 1,779 Consumer County Court Judgements (CCJs) are issued every day (based on Q3 2011 trends). The average value of a CCJ in Q3 2011 was £2,816.
• Citizens Advice Bureaux in England and Wales dealt with 8,652 new debt problems every working day during the year ending September 2011.
• It costs an average of £27.50 per day to raise a child from birth to the age of 21.
• 101 properties are repossessed every day (based on Q3 2011 trends).
• 88 new people a day became unemployed for over 12 months during the year ending October 2011.

1,764 people a day reported they had become redundant between August and October 2011

Source: www.creditaction.org.uk

The Money Advice Trust (MAT) said around 10m people, roughly 20% of the UK adult population, were finding it hard to manage their debts.

This comes on the back of a rise in the amount of people seeking help from free debt advice agencies to 1.54m in 2011, up from 1.4m in 2010.

MAT also warned that there was a far larger ‘latent’ demand for help, estimating that 2.5m individuals in arrears on at least one consumer credit product, household bill or payment.

Joanna Elson OBE, chief executive of the Money Advice Trust, said: “With unemployment rising and wage growth relatively flat, whilst prices are going up, day-to-day living will take up more and more of your money, which can make it hard to pay the bills.

“Our research shows people are going to extreme lengths to get on top of their finances, with some selling treasured items, such as jewellery, cars and even pets, just to make ends meet.”

The research, carried out by the University of Nottingham for the Money Advice Trust, is an update on previous work forecasting demand for debt advice in the UK.

Based on the Office for Budget Responsibility (OBR) economic forecasts, the research predicts a sharp rise in demand for advice on debts in the first half of this year, mostly down to growing unemployment and stagnating wage growth.

Source: www.credittoday.co.uk

DO YOU really need that gym membership which lifts a lump sum out of your bank account each month? And why struggle with private healthcare premiums when they soar on the wrong side of 50?

Many of us will need to look closely at where our money goes in 2012.

The Family and Parenting Institute has warned that the average income of households with children will fall by 4.2% between now and 2016 – equivalent to £1,250 per year.

Andrew Hagger, savings expert at Moneynet.co.uk, says: “Many people promise to sort out their finances – and do nothing about it.

“This time, set some time aside and look at everything going out on your bank account and credit card statement, and tackle each individual component.

“You have to pay council tax, but other things – mortgages, insurances, utility bills – invariably cost less elsewhere. And always look to switch a credit card balance to a 0% introductory rate, if your credit rating allows it.”

Kevin Mountford, head of banking at MoneySupermarket.com, reckons a family can save as much as £3,200 a year from a smart financial review.

He says: “Nobody denies 2011 was an uphill struggle as increased winter fuel bills and the rising cost of living took their toll on families.

“As Christmas bills kick in, many households could hit a financial tipping point, as research suggests a fifth of Britons were pushed deeper into debt by the cost of festive celebrations.

“Consumers must tighten up their finances. Despite the tough economic climate, too many Britons still make the mistake of sitting on average products which provide a low return or cost more than they need to.

“Often, savings don’t even require a change of lifestyle, merely a few minutes of research to check your current deal. Then compare it to other products and change to a more competitive deal if necessary.”

A rash of new products from various providers gives another incentive to go through the household accounts. Here’s an essential checklist of potential savings:

Get debts down – as fast as possible

“Aim to become debt-free as soon as possible,” says Ray Black, financial adviser and founder of Money Minder.

“In this climate, it’s foolish to have savings earning a relatively low rate of interest and debts on which you are almost certainly paying a much higher rate.

“Look to pay off your most expensive debts first and consider consolidating some debts to cut interest charges.

“If you are really struggling with debt repayments, rushing into an individual voluntary arrangement or declaring yourself bankrupt may not be the wonder solutions some companies suggest. Get good independent advice from organisations such as the Citizens Advice Bureau, Credit Action or the Debt Advisory Service.”

Mortgages

“The market is much better than 12 to 18 months ago, particularly for those with a slice of equity in the home, or a decent deposit as first timers,” says Andrew Hagger at Moneynet.

“There are some good five-year fixes: for borrowers with 25% equity, The Co-Operative Bank offers 3.59% with no fee, while borrowers with a 15% deposit can get a Yorkshire Building Society deal at 4.29% with a £495 fee.”

According to MoneySupermarket.com, switching a £150,000 mortgage from an average standard variable rate of 4.83% to a market-leading two-year tracker rate from First Direct (2.08%) would save £1,207.84 annually.

Coventry Building Society deals launched this week include five-year fixes from 3.58% for those with a 65% loan-to-value ratio.

For first-time buyers, a five-year fix costs 5.25% up to 90% loan to value, and, for buy-to-let investors, a 5.35% fix until March, 2017, is available with a maximum 75% loan to value.

Consider an offset mortgage

“They are an incredibly useful tool in the current market as they enable borrowers to earn tax-free interest on savings at the same rate as they are paying on their offset mortgage,” says David Black, insight analyst at Defaqto.

Of 329 offset mortgages available, Black tips two: First Direct’s lifetime base rate tracker costing an initial 2.48% (Bank base rate plus 1.98%), with maximum loan to value 65% and a £1,499 arrangement fee; and a five-year fix from Yorkshire Building Society at 3.59% until February 28, 2017, with maximum 75% loan to value and £995 fee.

Get the right current account

Most of us are loath to switch, but banks are really chasing new customers.

Santander’s Preferred current account pays 5% interest on credit balances, so anybody keeping a £1,500 balance in this account for a year earns £65.25 in interest.

However, if you use an overdraft every month, you could save £292.50 by switching from an account with an average overdraft rate of 19.5% to Santander’s Preferred current account at 0% for 12 months.

Maximise your savings power

Savers lost out in 2011 as interest rates lagged way behind inflation.

According to MoneySupermarket.com, switching from an easy account paying an average 1.08% to Nationwide Building Society’s MySave Issue 4 easy access account (3.12%) generates an extra £102 a year on a £5,000 savings pot.

Meanwhile, Cheshire, Dunfermline and Derbyshire building societies – all Nationwide subsidiaries – have launched a Platinum Monthly Saver, to encourage regular saving.

This fixed-term, branch-based account pays a competitive variable rate of 5% gross pa/AER (variable) until January 31, 2013, or the first anniversary of the account opening with Dunfermline Building Society.

At the end of the fixed term, the accounts automatically revert to an instant access account paying a variable rate of 1% gross pa/AER with no restrictions on deposits or withdrawals. The societies will tell customers when their fixed term expires.

Choose the right credit card

Provided their credit score is satisfactory, somebody switching a £2,000 debt on a card with an average APR of 18.4% to the market-leading Barclaycard Platinum, charging 0% for 22 months, avoids any interest in the first year, saving £263.27 after allowing for the balance transfer fee.

Get the right deal on your car and home insurance

MoneySupermarket.com reckons too many people overestimate the level of cover they need, and pay too much as a result.

Paying annually for home cover is cheaper than paying monthly. On average, consumers who use MoneySupermarket.com to switch insurance providers can save £383.22 on car insurance and £125.59 on home insurance, a combined saving of £508.81.

Get utility bills down

For starters, check that you are on the right tariff for your consumption level.

The easiest way to save is by moving to a dual fuel online direct debit deal. By switching to the best online tariff, instead of staying on the average standard tariff, customers save on average £256.25 over 12 months with First Utility iSave 9, says MoneySupermarket.com.

Other ways to cut energy bills include: turning down the thermostat by one degree can cut annual bills by 10%; beefing up loft and cavity wall insulation to avoid up to 35% of heat loss; and turning appliances off at the wall instead of leaving them on stand-by mode.

TV, phone and internet charges

A packaged bundle – including TV, landline and broadband – can deliver big savings. For example, Sky provides a TV Variety Pack which includes broadband, line rental and a basic TV package, with unlimited evening and weekend calls.

According to MoneySupermarket.com, combining products in this way can save an average £125.40 over the year. Review your subscriptions annually to ensure you’re getting the best deal.

Source : www.liverpooldailypost.co.uk