Personal debt of Scots second lowest in UK
SCOTS have the second lowest level of personal financial debt in the UK, according to new research.
Latest figures show the amount owed in credit cards, store cards, overdrafts and loans by householders north of the border was £2,500.
This compares to the highest amount of £4,200 owed by those in the south east, the report released yesterday from the Office of National Statistics (ONS) shows. Households in Wales had the lowest financial liabilities at £2,000.
However, latest figures from the ONS reveal the combined debt of households in Britain has jumped to over £90 billion in 2008-10, an increase of 10.3 per cent from £85.9 billion in 2006-08.
The precentage of individuals throughout the UK reporting financial debt as a burden has increased between the two waves of the survey.
Worry about being in debt was highlighted by the increase in the number of people describing owing money as a “heavy burden”.
In 2006-08 16.2 per cent of people regarded debt that way but two years later this figure had risen to 18 per cent.
Just over half of households had some form of financial debt, with the median amount being borrowed increasing by £400 to £3,200 between 2006-8 and 2008-10.
Households headed by younger people owed the most, while those with over 65-year-olds had the lowest proportion of financial liability.
The ONS counted financial liabilities as credit and store cards not settled each month, overdrafts and all forms of fixed-term loans.
Margaret Lynch, chief executive of Citizens’ Advice Scotland, said while Scotland may be near the bottom of the personal financial debt league table too many people were still borrowing beyond their means.
“The evidence from the CAB offices across Scotland is that debt continues to be a living nightmare for too many Scots. For years now the cost of living has risen steadily, while household incomes have stayed level or have fallen.
“As a result, basic issues like paying bills and putting food on the table has become a real challenge for many families in Scotland, and many of them feel they have no option but to borrow. Borrowing small amounts at rates you can afford to repay is fine, but the problem is that too many people are borrowing more than they can afford, and are going to high-interest sources like payday loans, which can make a small debt into a huge one in the space of just a few weeks.
“People who are struggling to cope with their finances can come and get expert financial advice from their local CAB. We can help them for example to manage their debts, and we may also be able to tell them if they are eligible for financial help which they don’t know about.”
Dr Howard Archer, chief economist of Europe and CIS economies, said that personal debt had long-term implications for the economy.
“Increased debt levels have been a major factor weighing down on consumer confidence and limited consumers’ willingness and ability to spend.
The extended need for consumers to deleverage is likely to limit the upside for consumer spending for some time to come, and hence constrain overall growth prospects.
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