Disparity between financial reality and spending 'causes debt problems'
Published On 18 April 2007
UK families could find themselves seeking debt relief in the near future, a new study has warned.Figures published by the Alliance Trust Research Centre (ATRC) indicate that there has been "an alarming split between rising consumer spending and worsening financial conditions" over the last decade.
In recent years ATRC's 'financial reality index' - calculated by taking into account various economic factors - has steadily worsened. However, in the same period household expenditure has increased.
ATRC data shows that debt is becoming an increasing problem for many people in the country, leading to fears that more people may need debt relief services or even IVAs in the future.
Figures published by the Office of National Statistics (ONS) revealed that inflation rose above three per cent last month, making a further interest rate increase likely in the near future.
This would only stretch consumers further and increase how much they have to repay servicing existing debt.
With consumer debt standing at £1.3 trillion at the end of February, further interest rate increases could have a significant impact on how much disposable income consumer have available to them in the future.
