Over 66% Of Young Brits Have Taken Debt in 2022 to Combat the High Cost of Living
The Brits are experiencing a “debt crisis” in 2022. According to MoneyTransfers.com, over two-thirds of young people have taken debt to keep up with the high cost of living.
The average person in debt is 18-34 years old. The most common types of debt taken out are personal and payday loans. This could lead to long-term financial difficulties, as high amounts of debt can make it difficult to get a mortgage or loan in the future.
Commenting on the report, MoneyTransfers CEO Jonathan Merry said,
Life is becoming unbearable to young people in Britain. The cost of living is rising, but wages are stagnating. This is creating a perfect storm for debt. What’s even more worrying is that many young people are turning to high-interest payday loans to make ends meet. This could have a devastating impact on their financial future.MoneyTransfers CEO, Jonathan Merry
Tax Hikes Are Part of the Problem
Britains cost of living began rising in 2021 due to inflation. However, the tax rise in early 2022 made the situation escalate. The killer blow was a result of skyrocketing energy costs.
The recent tax hikes are the highest in two decades. And although the taxes went up, the wage growth in the UK has stagnated. This means that people are taking home less money, despite paying more taxes.
Gas prices are rising due to several factors, including supply constraints and disruptions brought on by Russia’s war in Ukraine. Most Brits depend on it to produce energy and heat their homes, and they are already concerned about the upcoming winter.
It’s Never Too Little When It Comes to Helping
The British government reached out to insolvency counselors. The state instructed them to consider how living costs affect people’s ability to pay loans. The move aims to cancel most of Brit’s debts or reduce monthly payments.
The insolvency team has released a policy that manages individual voluntary arrangements. The policy factors flexible repayment plans as negotiated by creditors to allow repayments of bad debts.
The decision comes amid the rising cost of living occasioned by rising food, fuel, and electricity costs. No help is little when it comes to mitigating living costs.
According to the Office for National Statistics, 23,997 (individual voluntary arrangements) IVAs were taken out in the first quarter of 2022. The number of people taking out DROs (debt relief orders) increased to 6,629 in the same period.
Separate official data indicates that, during the past year, there were between 6,300 and 7,800 IVAs registered per month.