Carol Craig is the Centre's Chief Executive. She is author of The Scots' Crisis of Confidence, Creating Confidence: A Handbook for Professionals Working with Young People, The Tears that Made the Clyde: Well-being in Glasgow and The Great Takeover: How materialism, the media and markets now dominate our lives. She is Commissioning editor for the Postcards from Scotland series. Carol blogs on confidence, well-being, inequality, every day life and some of the great challenges of our time. The views she expresses are her own unless she specifically states that they reflect the Centre's thinking.
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The Money Advice Centre has just published a report based on research they’ve conducted in the UK which suggests that over half of folk in the UK (52%) are struggling to keep up with their bills and credit commitments. This is up from 35 % in 2006. That’s a fairly big increase in the past few years. It also shows that in the last three years 36 % have experienced a shock to their finances; 21 % have experienced a large drop in income; and 42 % would have to think about how to cover an unexpected £300 bill.
Such figures undoubtedly suggest a huge amount of stress, money worries and sleepless nights for millions of families and individuals in the UK.
As I outline in my small Postcards from Scotland book The Great Takeover: How materialism, the media and markets now dominate our lives’ these types of money worries are to be expected in our culture. A lot of this is about corporate greed and the widening pay gap in the UK. Quite simply for lots of workers their wages are far too low. But there are also cultural issues as well.
After all we living in a consumer society where we're constantly urged to spend. Indeed our sense of worth may depend on having a bigger house than we can afford, maintaining a certain lifestyle and buying the latest gear. So if we're not able to buy what we want, because our income is too low, then all we need do is borrow, take the biggest possible mortgage and use credit cards. In the past thirty years personal debt in the UK has skyrocketed: in 1980 the debt/income ratio was 45%, in 2007 it was 157.4%. (TUC 8) At the end of April 2013 personal debt in the UK stood at £1.408 trillion. To put this in context, individuals owed almost as much as the entire UK produced during 2012. Outstanding mortgage loans were also up and there was only a tiny drop in consumer credit. The daily value of plastic card transactions in the UK in January 2013 was £1.373 billion. Average household debt, excluding mortgages was £7,891 and including mortgages £55,514. The Office for Budget Responsibility predicts this debt mountain will grow and that UK personal debt will reach £2.0444 trillion in 2017. As most people's wages are not rising in line with inflation people are now saving less per month than a few years ago. A Co-operative Bank survey showed that 20% of people in the UK have no savings. Those under 35 are three times more likely to have no savings than the over 55s.
A few years ago, in terms of personal debt, the UK was second highest in the international league table, below the USA. However, their figure has improved and Britain now has the highest level of personal indebtedness (in terms of GDP) of all developed economies. It has taken a lot of maxing out on credit cards ('because you're worth it') and mortgages to get us to that figure.
Recent data show that if we aggregate personal, company and state debt, the UK is the most indebted country in the world – much of this comes from our financial sector. UK government debt is also considerable: In June 2012 it stood at £1.04 trillion.
The Money Advice Centre’s research suggests that that people are now trying to get a better grip on their money. Many more people now check their bank statements regularly than a few years ago and there’s more saving. Nonetheless 25 % still said they preferred to live to today than plan for tomorrow.