Make sure you don’t get more than you hoped for this Christmas
In the run up to Christmas, many of us begin to look forward to the festive period and the New Year. We begin to look forward to not only buying gifts, but receiving them and hope the January sales will bring us bargains that help us cope with the financial hangover left over from the festive period.
However, as we look ahead at this year, we need to ask ourselves, could we end up with more than we bargained for this Christmas?
All the indications are that, if we don’t watch out, that’s exactly what may happen.
Research by accountancy firm PWC recently found that in the first five months of 2017:
- The price of many staple foods rose by 5%
- The cost of butter increasing by 36% between Christmas and the end of May 2017;
- Poultry, in the same period, went up 27% and milk by 8%.
Current fears are that in the first few months of 2018 this will be repeated, with experts now warning that with inflation running at 3%, the highest level in 5 years, retailers are keeping prices low to boost sales before Christmas, but have plans to increase them in the new year.
All of which indicates that in 2018, things are not going to get better for British families, and, with the continued uncertainty of Brexit and the Bank of England choosing to put interest rates up again, the prices of household goods and the level of personal debt will continue to rise.
Rising Personal Debt
On top of this, there is now fears that the personal debt level in the UK, which is now over £200 billion, will scare investors away. John Redwood, Member of Parliament, and former UK Government cabinet minister, writing in the Financial Times, has warned investors their money would be safer outside the UK. He fears growth in the UK economy will slump in 2018, as the Bank of England reigns in personal borrowing and the availability of car finance, by making it more expensive for banks to borrow from them.
New figures also show that the number of county court judgements awarded in England and Wales in the first nine months of 2017 have also increased by 34%, on the same period in 2016 and are 10% higher than the total number awarded in 2008, when the credit crunch was at its peak.
None of this paints a comforting picture for UK households, and many are already beginning to buckle under the financial pressure. UK Government figures show that since the end of June 2017, insolvencies are now up 10.6% in England and Wales and Individual Voluntary Arrangements are at their highest level since they were introduced thirty years ago.
The developing problem has even attracted the attention of the UK Treasury Committee at Westminster, which has found that levels of personal savings have now fallen in the last year and over 15% of UK consumers are over-indebted. The Committee is looking at how sustainable this is for UK households and what effect this over-indebtedness is having.
This doesn’t bode well for British consumers and is probably a warning that people should not get too carried away this Christmas and that it would be wise to keep a tight grip on spending.
The New Year may well bring its traditional bargains, but it’s also likely to bring its own problems, starting on what is traditionally known as Blue Monday, which in 2018 will be the 15th of January and is the date the credit card bills begin to roll in.
The truth is, if you ignore the signs, the only thing on the horizon are dark clouds; higher prices, more expensive and harder to access credit, and creditors who are increasingly willing to enforce their debts by sending in the bailiffs, with the number of warrants issued in 2016 in England and Wales doubling to 190,000 from their 2014 levels.
Light on the Horizon
Currently the UK has some of the most modern and well-established consumer debt remedies available in the Europe and unlike many countries after the credit crunch, didn’t have to scramble to introduce them.
These include Individual Voluntary Arrangements in England, Wales and Northern Ireland and Protected Trust Deeds in Scotland. Scotland also has an innovative and relatively new remedy that helps people manage their debts in the form of the Debt Arrangement Scheme, which can prevent bankruptcy when it is not suitable. The UK Government has also recently announced it is consulting on introducing a similar remedy in the rest of the UK, to ensure all consumers can have breathing space.
So, if you are struggling, don’t wait too before seeking advice, otherwise you may get an unwanted Christmas present this year that you won’t even be able to give away.
If you need more information about the options available to you in dealing with your debt, you can always speak confidentially with one of our friendly advisors on 0808 2085 198.