Survey: Debt, Tight Access to Credit Among Brits' Top Concerns

By UK CreditCards.com

The latest quarterly bulletin from the Bank of England provides a glimpse of households' budgets and spending decisions and the factors that affect them.

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According to the report, the majority of households have experienced an income squeeze and are also having to contend with tight credit conditions, with lenders reluctant to hand out new credit cards and personal loans unless they are sure of an applicant's creditworthiness.

Here, CreditCards.com takes a look at some of the report's key findings and at how Britons are coping with the ongoing economic uncertainty.

Access to credit has tightened
Householders' access to credit has tightened since the financial crisis took hold in 2008, according to the Bank of England's latest report, which is based on the 2011 NMG Consulting survey. The proportion of households put off spending by concerns about the availability of credit has increased over time. It dropped slightly this year, but the proportion of households reporting credit constraints remains high compared to where it stood before the global downturn.

Distress over repayment problems remains high
The 2011 survey revealed that many people remain stressed over their inability to meet repayments on debts such as mortgages, credit cards, loans and utility bills. When asked about bills and credit commitments, 7.5% of respondents said they had fallen behind with repayments in 2011, compared with just 4.1% the previous year. Almost half of respondents said they had cut back on spending in order to keep up with bills and credit commitments, while 16% said they were working more and 14% admitted relying on their savings.

However, the report notes that this increase in difficulty with repayments may be largely due to rising gas and electricity prices. Indeed, the proportion of households that reported difficulty in managing unsecured debts -- such as credit cards, loans and overdrafts -- fell between 2010 and 2011, although it remained higher than pre-recession levels.

Conditions remain 'challenging'
In conclusion, the report authors said that UK households still face a "challenging" environment. They wrote: "Incomes were reported to have fallen and the outlook for them was relatively uncertain. Some households reported that the fiscal consolidation was affecting them, mainly through lower income and higher taxes, and that they were responding, particularly by trying to increase their labour supply through finding a new job or working longer hours." The report authors added that the considerable pressures on household finances were exacerbated by the "tight" credit conditions in 2011.

See related: Consumers expect inflation to remain high in 2012; UK consumers 'paying less off credit cards'

Published: 19 December 2011