New mothers are among the people likely to suffer from credit card debt, according to a new study.

Research by uSwitch found 28 per cent of new mums end up in debt when they take maternity leave, with their average debts reaching £2,500.

While ten per cent go into debt by borrowing from their family, 14 per cent use credit cards or overdrafts to fund their baby-related expenses.

And the cost of starting a family does not just include forking out for cots and baby clothes, with the lower income from being on maternity leave being such a problem that 11 per cent cut this period short, while nine per cent reconsider a previous decision not to go back to work.

So hard is the situation for many that 23 per cent of couples are delaying starting a family because of the cost, while 39 per cent of parents with children do not want any more because of the expense involved.

Director of consumer policy at the price comparison site Ann Robinson said: “Planning for a baby is tough at the best of times, but in the face of the soaring cost of living there is even more pressure on family finances.

“For some families this can mean some very difficult decisions. It’s heartbreaking that so many mums are being forced into debt or having to cut short their maternity leave just to make ends meet.”

Parents getting into debt because of having a baby may find a debt management plan can help to ease the burden they face as they get used to the extra cost and all the other stresses and strains that come with being a new parent.

Despite the expense of having children, the actual number of children being born in the UK has risen recently.

According to the Office for National Statistics, the most recent year for which figures are available – 2010 – saw 807,000 live births, the highest tally since 1972.

Jacqueline Cohen, Group Marketing Manager at ClearDebt has blogged on this issue several times.  She comments: “This is an extremely important issue for debate. The financial pressure on young mums and dads when they have a new baby is enormous unless the dad earns enough to cover two average salaries – take home pay being around £3,000 – which in the current climate, for most families is unlikely.

And whilst new mums might borrow off family or credit cards to make ends meet during those first few months, when they return to work the situation only becomes harder as they struggle to pay back their debt in addition to childcare costs.

“I’m not at all surprised with the statistics released by uSwitch and just wish the government could take this issue seriously and look to do more to financially support these families during part if not all of the maternity period.”

Consumers struggling with debt may find their situation gets even tougher due to the worsening of the inflation situation.

With the Consumer Prices Index (CPI) rate ending five months of falls with a small increase from 3.4 per cent to 3.5 per cent in March, the impact on those struggling to pay all their bills while still managing their monthly repayments may be to make this considerably harder.

Commenting on the way the situation will hit people in the pocket, general secretary of the Trades Union Congress Brendan Barber said: "Inflation is not falling as fast as many hoped. With pay growth also weak, families are getting poorer every month.

"Wages have been falling since mid 2010 and the government's own forecasters are predicting a three year earnings drop."

Mr Barber went on to attack government policies, claiming lower tax credits have taken more money away from those on low incomes than they have gained through raised personal allowances.

The decline in wages Mr Barber spoke of has been manifested in settlements that have remained below the CPI rate even as this has fallen since its September 2011 peak of 5.2 per cent.

This downward trend has been demonstrated again today (April18th) as the latest employment data from the Office for National Statistics has been published.

It revealed total pay in the three months to February 2012 was up by just 1.1 per cent (including bonuses) and 1.6 per cent excluding bonuses. The latter figure was unchanged since January, but the former was down by 0.2 per cent and both demonstrate that the rate of pay is still rising by well below the rate of pay growth.

By contrast, settlements in 2011 tended to be higher, often over two per cent, suggesting that the fall in inflation is reducing wage push pressure in the labour market to the detriment of employee pay packets.

One brighter note among the employment figures was that the three months to February brought a fall of 35,000 in the jobless numbers, the first quarterly unemployment fall since May 2011.

By James Francis

The average Briton only regards themselves as being in serious debt when it reaches £14,416, a new survey has found.

The financial safety net report by Bright Grey found the level of "debt tolerance" is still high, although it is £1,421 less than it was in 2010 as consumers gradually realise the problems owing so much money can cause.

The level of indebtedness at which consumers could seek an individual voluntary arrangement is about £15,000, so many who wait until they are in debt by this sort of amount may wish to consider this option.

Although it works as a form of insolvency, it may lack the stigma of bankruptcy, not least because such a deal with creditors – which involves reduced payments over a period of five years or less – is confidential, whereas bankruptcy can be made public.

Proposition director at Bright Grey Roger Edwards said: "People are more wary about getting themselves into serious levels of personal debt, yet over £14,000 is still clearly a cause for concern."

The most recent figures from the Insolvency Service – covering the final quarter of 2011 – revealed there were 13,047 IVAs, compared to 8,626 individual bankruptcies.

Posted by Paul Thacker

The economy is not going back into recession, but growth will be low because large firms are not spending their huge cash reserves, a new report has concluded.

An Ernst and Young Item Club report has said the UK economy will only see 0.4 per cent growth over the course of 2012 and notes that: "In the UK, companies have been swimming in cash while consumers have been drowning in debt."

It noted this trend differs from the pattern in some other countries, such as in the US. But the key point is that while Britons have been living beyond their means and borrowing too much, large firms have been able to maintain their profits, yet are not investing their cash through an apparent lack of confidence, which is in turn is increasing the overall gloom.

This apparent catch-22 situation in which companies will not spend until the economy improves but the outlook stays bleak until they start investing – could lead to a protracted period of struggle for consumers.

One reason for this is that while people are looking to pay off their debts, they are not enjoying any improvements that could help them in this task, such as rising wages.

By contrast, they have been hit with rising prices that have boosted the coffers of major firms, such as energy companies, contributing to a squeeze on disposable incomes that makes it harder to pay off money owed.

For some, this could mean deep difficulty in maintaining repayments and a debt management plan.

One expert predicting a long haul for the UK is Philip Coggan, Buttonwood columnist and Capital Markets editor at The Economist.

He said last week: "It is going to take five to ten years to sort out this mess and in that period, different countries will follow different routes to get rid of their debt."

By James Francis