Rise in household financial distress worrying, says Resolution Foundation

By agency reporter
December 18, 2017

The Bank of England’s NMG survey from its Quarterly Bulletin found increasing levels of financial distress among households in 2017, and more saying they expect their personal finance situation to deteriorate in 2018 than to improve.

Commenting, Matt Whittaker, Chief Economist at the Resolution Foundation, said the survey, "highlights a concerning deterioration in households’ personal finances over the past 12 months, which has contributed to the first rise in measures of financial distress in four years.

“While debt repayment burdens remain some way below the levels experienced following the financial crisis, it is worrying that the rise in distress has come against a backdrop of ultra-low interest rates that are expected to rise over the coming years.

“Households’ worsening personal finances and increased pessimism about Britain’s economic outlook suggest that the recent period of consumption-led growth may be running out of track.

“The survey also reminds us that while levels of indebtedness are often viewed through an interest rate lens, it is the state of family finances – which have come under real pressure this year – that is the main driver of financial distress in Britain today.”

Key findings from the NMG survey:

  • net balance of eight per cent of surveyed households say their financial circumstances deteriorated over the previous 12 months;
  • net balance of four per cent think things will get worse in the next 12 months (the first time this measure has been negative since the question first appeared in 2015); and,
  • net balance of 30 per cent now say they expect the general economic situation to deteriorate in the next 12 months.

Download The financial position of British households: evidence from the 2017 NMG Consulting survey here

* Resolution Foundation http://www.resolutionfoundation.org/

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