The politicians seem to have been under starter’s orders for months now, but the general election chase is now under way with living standards being raised by Labour as a key issue against the coalition government.
It looks as if earnings are beginning to grow, and household finance may just be improving for many people, though statistics suggest we’re only about back where we were before the financial crash.
If there is any feel-good factor as we near polling day, it looks as though it being driven by spending that’s fuelling renewed growth in personal debt. A reports from accountants PricewaterhouseCoopers reckons the average household owes about £9,000 after a 9% rise in unsecured borrowing last year.
But more concerning is the prediction that this figure will rise to £10,000 by the end of 2016. And, reports the Independent, the debt to income ratio is growing. It said: ‘The household debt to income ratio is projected to reach 172% by 2020, exceeding its previous peak set before the financial crisis.’ This includes mortgages and other debt secured on property, which suggests that while home loans are now much harder to obtain, people are once more spending on their credit cards because they are less worried about job security and affordability.
That’s fine while interest rates stay at their record low, which seems likely for some time to come, but PWC’s report points out that a 2 percentage point rise in interest rates would cost households an extra £1,000 a year.
The £19.7bn increase in unsecured borrowing last year breaks down into £9.1bn from student borrowing, £4.2bn from credit cards and £6.4b from personal loans and overdrafts.
Even without a rise in interest rates, some people are perhaps biting off more debt than they can chew. That could leave some companies with a growing pile of unpaid invoices. SJ Collections can help get your accounts back on track when the cash flow shows signs of drying up.
Meanwhile, the election result looks difficult to predict, with pundits scratching their heads over what is at least a six-horse race. That’s going to make 7 May a very interesting election day.