News

People may still be facing debt concerns due to the recession as a politician has described the economy as being “still weak”.

Vince Cable, the Liberal Democrat shadow chancellor, was responding to the Bank of England’s latest quarterly bulletin and warned of future employment insecurity.

He said that there was still “worrying uncertainty” regarding the current job market due to the extent of the economic collapse.

The Bank’s statistics provide evidence that any cutbacks imposed by the government would result in increased unemployment, the MP added, stating that such measures would make “the deficit worse” and exacerbate the country’s problems.

He continued to say that economics, not “political dogma”, should provide the basis for the methods used to tackle the deficit.

Earlier in the month, Labour MP Helen Goodman, speaking from the Northern Money Conference 2010 at the Contemporary Urban Centre in Liverpool, said that the government will be taking measures to build a more financially responsible framework to prevent people from falling into debt.

By Joe Shervin

The elevated amount of insurance claims brought about by the cold winter weather could have a knock-on effect for insurance prices, which may harm those struggling with debt, an industry expert has warned.

Steve Foulsham, technical services manager for the British Insurance Brokers’ Association, was speaking in reaction to figures released by the Association of British Insurers.

The statistics showed that extreme conditions in December and January in the UK led to 335,000 claims, with insurers paying out around £650 million as a result.

Motor accidents and damage to homes and businesses made up most of the amount, due to high numbers of accidents on the roads and burst water pipes indoors.

Mr Foulsham said: “It wouldn’t surprise me one bit if it leads to some sort of rate hikes in the market, because of the sheer volume of claims.”

Earlier in the week, a study carried out by uSwitch.com revealed that about 5.5 million households are now in debt to energy suppliers following the freezing temperatures of the last few months.

By Joe Shervin

Many adults could fall into debt if they experience a drop in income of £300, as they would not be able to afford their mortgage repayments, a study has suggested.

Research commissioned by Callcredit Information Group and carried out by YouGov, has revealed that 25 per cent of those aged between 35 and 44 would be dicing with financial difficulty should their wage decrease by such an amount.

The findings show that people in that age bracket, with a young family to support, have been hit particularly hard by the recession and have attempted to secure higher credit limits to help them through the tough spell.

Graham Lund, managing director at Callcredit, described the figures as “highly alarming”.

He said that many of these individuals are “living on a financial precipice, where just one negative event, such as a reduction in paid overtime or an unexpected expense could have disastrous financial consequences”.

Earlier in the week, Lord Marlesford expressed his concerns over rising credit card debt as it emerged the amount had increased by £8 billion in the last year.

By Joe Shervin

Christmas spending has caused many people to become insolvent in March, new research has shown

Statistics released by R3 suggest that 31 per cent – almost a third – of personal bankruptcies that take place in March are directly related to overspending in the festive months.

Members of the trade body have predicted that over 150,000 individuals will file for the option in the UK this year.

Peter Sargent, president of the company, said that many who were struggling financially at the end of 2009 were a little too extravagant in their Christmas outgoings.

He explained: “These people will now be suffering from the Christmas Crunch, having seen their debts snowball since the large credit card bills began to hit their mats in January.”

Earlier in the week, figures released by the Consumer Credit Counselling Service indicated that more than half of the individuals it recommended bankruptcy to last year were men.

Many households in the UK have been left at risk of debt due to the coldest winter in 30 years.

New research from uSwitch.com has revealed that around 5.5 million – 21 per cent of the nation – are now in debt to energy suppliers as consumers looked to heat their homes during the prolonged chilly period.

It found that one in four – 41 per cent – of those in the red have to pay back more money than they did at the same time last year.

The independent price comparison service disclosed that the total amount owed in energy bills now stands at an estimated £728 million.

Ann Robinson, director of consumer policy at the website, said: “The increase in energy debt this year is symptomatic of the fact that we are entering an era of high-cost energy.”

Earlier in the month, figures released by NS&I’s Savings Survey suggested that the British public had been saving less this winter than they did the year before.

By Joe Shervin