Consumer Credit Counselling Service (CCCS) is concerned that rising unemployment and high inflation will lead to a major rise in personal debt problems for thousands of people over the next few years.
The debt charity says that unemployment is a major factor in personal debt problems with almost half of the people it counselled last year citing unemployment or reduced income as the reason for their debt problem. It is therefore very worried that the Office for Budget Responsibility’s (OBR) revised its forecast for unemployment in 2011 upwards to 8.2%.
CCCS also points to the OBR’s amendment to its inflation assumption up 1.1% and 0.6% for 2011 and 2012 respectively. It says that household budgets are already under pressure and that, on average, CCCS clients had only £43 a month disposable income to repay over £22,000 in unsecured debt.
CCCS says that this will be compounded by the OBR prediction of rising household debt over the next five years. Last August, the OBR said that household debt would decrease as a percentage of household income over the next five years, but it now says it expects it to increase. The OBR now expects debt as percentage of household income to rise from 160% in 2011 to 175% in 2015.
Delroy Corinaldi, CCCS external affairs director, said: “The OBR forecast spells disaster for thousands of UK consumers and the next few years will see a significant rise in the number of people in need of financial help and advice. We urge anybody struggling with debt to contact a debt charity such as CCCS for free counselling and support.””