Muna Said, Registry Trust
Thursday, 21st March 2024
The cost of living has been rising in the UK and across the world since 2022. From April 2021 to January 2024, energy prices rose by 75%, with food prices rising by 30%.
Taking the above increases into account, the average personal debt in the UK has been increasing steadily year on year. In November 2019, the UK average personal debt stood at £31,643, and this has been gradually growing ever since, and was reporting £34,737 as at November 2023.
The average credit card debt per household in 2023 was £2,452, which was the highest it had ever been in four years. The annual interest accumulated on debt increased by 59% from November 2021 to November 2023. According to the TUC (Trades Union Congress), statistics show that unsecured debt that includes personal loans, credit cards and overdrafts could rise from £13,361 to £14,792 per household, which is an increase of 11% in 2024.
The registered debt relief break requests increased by 25% in 2023 compared to the previous year. This request was introduced during COVID-19 with households across the UK falling into arrears with bills and rent.
England and Wales saw 70,772 people register for debt relief in 2022, this figure jumped to 88,390 in 2023. Running alongside this data, there were 103,454 individual insolvencies registered in 2023, and 31,717 of these were debt relief orders (DROs), which is a 31% increase from 2022.
Citizens Advice reported that during 2022-23 they helped 2.66 million people with one-to-one advice, with 84% of people using their local services due to the cost of living crisis. The cost-of-living support was due to end on February 22nd, 2024. This can have a significant impact on households who are already struggling to make ends meet. They may have to cut back on essentials and rely on loans and credit cards, which can lead to increased financial stress and more arrears. As a result of the cost-of-living support ending, it will be interesting to see how this influences the forecast for 2024.
The UK technically entered into recession at the end of 2023 (however early signs of improvement in 2024), nevertheless, it could impact the cost of living for households even further in 2024. With some individuals continuing to find it difficult to afford the basic necessities, we could see a rise of CCJ’s in the first half of the year.