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26.07.2018

Northern Ireland Suffers from Highest Personal Debt Levels in the UK

As personal debt levels soar and 8 million people in the UK continue to suffer due to their problem debt, it has emerged that within the UK, people living in Northern Ireland are struggling the most with their debts.

This follows similar reports in previous years which highlight their lower averages incomes, higher debts and lower financial confidence that have impacted the region. Perhaps most worryingly very few people are coming forward to get help, which only serves to exacerbate the problem

Debt in Northern Ireland

Various reports over the last few years have demonstrated just how difficult the situation can be in Northern Ireland. Debt is very pervasive, and many people are still struggling following the Great Recession from 2008.

In 2014, one charity reported that Northern Ireland’s debt was 20% higher than debt in the rest of the UK. In the UK that year, the average amount of debt from credit cards and unsecured loans was approximately £15,300, but in Northern Ireland, that figure rose to approximately £18,400.

This study also highlighted the difficulties faced by those who are self employed in Northern Ireland and the rest of the UK. It reported that those people had debts that averaged a huge £36,000. That is almost double the amount of debt that is held by the average person in the UK.

Similarly disheartening statistics came in 2015, as the Office of National Statistics reported that Northern Ireland had the lowest average income of any other region in the UK. They calculated an average household income of £32,000 for the UK, but only £26,500 in Northern Ireland, resulting in a yearly shortfall of £5,500.

A more recent investigation on Northern Irish debt was undertaken by the Belfast Telegraph in 2016. It found that 250,000 people in the region were suffering from debt. Families were highlighted as a major concern as they consisted of 62% of those 250,000 people; notably 31% were families with two incomes.

Low percentage of people seeking help with their debt

The repossession rate was also reported by the paper to be four times that in the rest of the UK. It was even estimated that it would rise from 15,000 repossessions in 2015 to 32,000 this year. This shows that it isn’t just unsecured credit that is a major concern, mortgages and housing is also a key aspect of debt in Northern Ireland.

One case study highlighted by the Belfast Telegraph demonstrates home-owner Vincent’s struggles when he bought a buy-to-let terraced house just before the Financial Crisis. Initially, rent continued to pay the bills, but repairs and a failing business led to a reliance on credit. Unfortunately, selling the property did little to help the situation as the market had crashed. It was only once he had entered into an IVA, which protected his home as well as allowing him to pay off his debt with manageable payments, that he was able to financially recover.

Ultimately, the most concerning aspect of this 2016 report was the number of people who were seeking help at the time. Of the 250,000 people struggling with debt, only 11% were trying to get help. This means that 193,000 adults who were struggling in 2016 were struggling alone with their financial situation, rather than seeking help from an advisor.

New Research

Unfortunately, two years on, the picture has not improved. The Financial Conduct Authority’s undertook their Financial Lives Survey and released the results this month. After asking 13,000 people, it became clear that the region with the most average debt is still Northern Ireland. Their evidence includes:

  • The amount of unsecured debt, which doesn’t include mortgages, in the region shared out between all the adult population, including both those with debt and those without, results in each person having £3,990 worth of unsecured debt.
  • This is £670 higher than if you were to share the unsecured debt of the United Kingdom among its total population.

The research also demonstrated that Northern Irish adults use more catalogue and store card credit than any other region in the UK at 10% for catalogues and 8% for store cards, while the UK as a whole averages out at just 5% and 3% respectively.

Savings were another issue raised in the report. As both a symptom and a cause, Northern Irish residents reported low levels of savings:

  • 12% admitted that they have no savings, while 60% have savings under £10,000.
  • Over half the population of Northern Ireland, at 56%, do not think that they would be able to cover a week’s worth of living costs if they lost their income.
  • Investments are, of course, similarly lacking with 78% of Northern Irish adults having no investments.

More financial education is needed 

Using the ONS statistics from 2015, it is possible to suggest that these financial problems come from the region’s lower than average incomes. But another explanation is the level of financial education in the region. Almost 25% of respondents from Northern Ireland felt that they have a ‘low financial capability’, when only 17% of the UK described themselves as such. Similarly, only 10% believed themselves to be ‘highly knowledgeable in financial matters’, compared to 16% of the citizens of the UK.

Andrew Bailey, as chief executive of the FCA, said of the report,

‘This survey shows just how different the experience of financial services is for consumers across the country. That’s important for us, as we shaped financial services policy. But it is also important for firms, as they decide how best to serve their customers’

While it is great to think the FCA is working to understand the differences in the various regions throughout Britain, this troubling report also serves to highlight the extent of the ongoing debt crisis which affects people all over the country. More needs to be done to aid this situation in Northern Ireland and beyond if we are to genuinely help those struggling most.

If you are one of the hundred of thousands of people struggling in silence in Northern Ireland due to your debts, or if you are one of the many others throughout the UK with problem debt, contact us today on 0808 2085 198. to discuss your situation.