Expert Concerned By 'Catch-22' For Firms
The number of people in the UK experiencing financial distress has increased to the highest level recorded by R3’s Personal Debt Snapshot and individuals in Yorkshire and Humberside are the most likely to struggle to payday according to the insolvency trade body’s findings.
The regional results for the number of individuals with savings show that in all but one region the number has decreased. People in Yorkshire are the most likely to say they do not have any savings (34 per cent), an increase of 12 per cent from last quarter.
Nationally, the latest research finds that eight million people are due to go into their overdraft this month, with two million believing that they will go into an unauthorised overdraft position. The findings also show that six million people are currently behind with some of their bills and payments – a jump of 2 million over the last quarter.
Andrew Walker, Yorkshire regional chair of R3 and a partner at Irwin Mitchell comments: “These figures make for worrying reading. It is clear that many have found themselves in a position whereby they have to go into and often exceed their agreed overdraft in order to keep on top of their bills and debt repayments. Unfortunately, more often than not this leads to bank charges, which further deplete the amount available for bills. It’s a catch-22 situation which can result in debts snowballing.”
Five million people worry about being made redundant, however a third of people (32 per cent) now admit that they are saving less than they used to – up 8 percent on the previous quarter; this equates to fifteen million people.
Walker continues: “A sudden change in circumstance, such as redundancy tends, to trigger insolvency so it is always advisable to put some money aside as a buffer. However, with many effectively experiencing a pay cut as living costs continue to rise, this is not always possible. With costs rising, it’s unsurprising that over a third of people (36 per cent) believe that their financial situation will worsen over the next six months.
“Interestingly, our research shows that 19 per cent of people now set a budget. This is definitely a positive step as, for those who are struggling with their debts, a budget is a key tool which allows you to clearly compare how much money you spend against your income. This will help to identify if any savings can be saved and where.”