The Office for National Statistics recently conducted a study into the change in household debt pre-recession compared to the first few years of it coming into effect. The research was named the Wealth and Assets survey and focused on the years 2006-08 and 2008-10.
The research found the median amount borrowed between 2006-08 and 2008-10 increased from £400 to £3,200. Therefore an average UK household owed £3,200 on credit cards, overdraft or loan during the time Britain hit recession. Credit and store cards that are not settled each month, overdrafts and all forms of fixed-term loans are categorized as household financial debt by the ONS. Mortgages however are not included.
£94.7bn is the figure for the total debt, excluding mortgages, that Britons had to deal with between 2008 and 2010. Half of all houses included in the study believed that their debt was a burden.
The figures show the debt burden for households in the UK rose by 10.3%. This rise is not however applicable for those living in London. Elsewhere, for example in the North-West, debt increased by 41.7% and by a third in the East Midlands. The highest amount of household debt at £4,000 was found in the South-East, whereas Welsh household had the lowest at £2,000.
“It seems reasonable to suspect that household debt has risen further since 2008-10, with people’s purchasing power being squeezed by extended weak income growth and elevated inflation”, said Howard Archer, chief economist at IHS Global Insight.
Less wealthy households were 13 times more likely to regard their debts as a burden compared to those in wealthier households. The findings also showed that household headed by younger people had more debt as opposed to those in older age groups. Over 65s had the least amount of debt. Lone parents are thought to have the highest amount of financial debt, yet had a total of £1,600 whereas married or cohabiting people with no children had a high £5,500.
Debt continues to be a heavy burden on many households across the UK and indeed over the world. Advice and help is available from a number of charities and organisations, for example Debt Free Direct.