Four out of ten Britons expect their financial situation to worsen and nearly half are worried about the amount of debt they have, according to a study by the insolvency trade body R3.
The survey showed that the number of people concerned about the level of debt they are carrying increased by 6% in the last quarter of 2010. Some 45% of those questioned said they were worried about the amount they owe.
Around 43% of people said that they thought their finances would deteriorate over the next six months, 13% more than the last time R3 conducted the same study in October 2010.
The research found that the young are more likely to worry about their financial situation and debt than older people. Some 57% of those aged between 25 and 34 admit to having money worries compared to just 20% of those aged over 65.
Steven Law, R3 president, said: “Since we last carried out the survey, people have seen a rise in the cost of living, from the VAT increase; to the rise of fuel and utility costs. This has happened against a backdrop of pay freezes, pay cuts and, in some cases, redundancies, so it is understandable that many are feeling pessimistic about their financial outlook.
“In my experience, most people’s debts become unmanageable due to a change in circumstance, such as sudden unemployment. This no doubt accounts for the generational split with regards to debt worries. In these uncertain times, for many of those of working age there is a real fear that if they do suddenly lose their job they will struggle to keep up with their debt repayments.”
Around 53% of respondents said they were worried about the amount of money outstanding on their credit cards. Overdraft facilities and mortgage repayments were shown to be troubling 27% and 25% respectively.
Some 25% of those questioned are currently saving less than they would under normal circumstances and just over a fifth say they are putting off big financial decisions.
An interest rate rise would cause problems for mortgage holders struggling with their monthly repayments with 28% of homeowners saying they could not afford an increase of £100.
Mr Law suggested that the findings might not solely be down to the current economic outlook and could be seasonally distorted: “Christmas is a time of heavy spending for many individuals so it is perhaps not surprising that the number of people concerned about their debts has increased since last quarter.
“Many people in Britain are already under pressure due to credit card debts, overdrafts and loans, and many have had to rely on these forms of credit to fund Christmas spending. This could explain why concerns about these types of debts have increased since previous quarters and why individuals have taken on more debts over the last few months.”
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