Not at any time since the last major economic recession of the
1990's have so many people in the UK suffered so much with debt
problems. Although the principal underlying economic factors
look good on the surface, a closer inspection of the statistics
reveals a structural debt problem in the UK, manifested by the
total amount of personal debt exceeding the trillion pound mark
in July 2004.
Previous cycles of economic decline have seen a combination of
high interest rates and unemployment; affecting mortgage holders
especially. This time around, however, 18 to 25 year olds are
reporting difficulties with repaying their credit card debts and
other personal loans.
According to the UK charity, the Consumer Credit Counselling
Service (CCCS), there has been a rapid rise in the percentage of
18 to 25 year olds reporting with debt liability problems,
doubling from 6% to 13% since 2002. The CCCS reported that the
average amount of money owed by under-25's who contacted them
has gone up from £ 12,000 to £ 15,000 in the last 2 years; an
increase of nearly 25%.
The CCCS argue that there is a generation growing up in the UK,
who have been exposed to a combination of consumer pressure and
easy credit. The young have become "desensitised" to debt and
are borrowing money to purchase non-essential items. Student
loans have meant that large bank overdrafts and credit limits
have become the norm for many young people. Also many of the
younger generation need to borrow large amounts to buy a home,
for example, and usually have no savings or assets to fall back
onto when they run into mortgage arrears.
Indeed the CCCS are telling more young people to take bankruptcy
as an option to solve their debt problems, many of these
graduates, and still in their 20's.
It's too soon to say whether the growth in the number of 18 to
25 year olds facing debt problems is a real phenomena, or part
of a general problem that is affecting the UK, but credit
agencies are becoming increasingly concerned.
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