Fears for increasing household debt in 2022
By Mr Bankruptcy
31st January 2022
It looks as though 2022 is going to be a challenging year for many households, with several financial changes putting pressure on household’s budgets.
I take a look ahead at the possible problems we could be facing and what households should be doing right now to prepare for them.
Stormy financial seas ahead
It seems you can’t go a day without the next financial crisis making headline news, all of them combining in a perfect storm that will impact the financial security of ordinary households as well as businesses. Over the next few months we’re likely to experience:
- Rising energy bills due to the price cap being raised
- Increased inflation, currently at its highest rate for 30 years
- The rising cost of living
- National Insurance rising by 1.25% in April
- Rising interest rates
- Stalled wage growth
What will be the economic impact on our pockets?
The breadth of financial change means few of us won’t feel some impact on our pocket. Rising costs in raw materials and energy, in conjunction with supply issues, will push up consumer prices.
Energy cost could rise by as much as 50% and such dramatic increases in costs have led the Bank of England to forecast inflation peaking at about 6% in 2022, three times its 2% target. Interest rates are also starting to rise, so mortgages loans and credit cards will also begin to cost more.
Rising costs, combined with increased National Insurance and stagnant wage levels, means many people will see an effective fall in their standard of living, with households expected to see an income drop of 1.7% in real terms this year. This is likely to result in a rise in household debts as many struggle to cover daily costs and the increasing cost of credit.
Be proactive about your finances
With over one fifth of UK households holding less than £100 in savings, they have little to cushion themselves against the financial challenges on the horizon. People need to shop around more to find cheaper options and the best deals to make their money go further. They also need to be more aware of their own financial situation and manage their budget more realistically, which may mean drawing in their horns and shedding liabilities.
In this business I often see the temptation to put potential financial problems to the back of the mind and hope the situation resolves itself, but it rarely does. Being proactive and acting early is essential to keep yourself out of long-term financial difficulties.
Debt is often difficult to talk about but seeking support and advice is the first step to take if you are feeling overwhelmed. With the likelihood of financially challenging times ahead, it will be a step many will be taking soon.
James Rosa Associates
James Rosa associates is a firm of debt advisors and debt adjustors. With a supportive, non-judgemental and friendly approach, we offer a full range of advice and professional services to individuals and business owners/directors who face unmanageable debt or who are involved in civil or commercial disputes. Our services include:
- Insolvency support
- Negotiated settlements
- Personal assisted bankruptcy
- Mediation
We are authorised and regulated by the Financial Conduct Authority (FRN665061) to work with clients to produce bespoke solutions to fit their specific circumstances.
Find out if you qualify for a free consultation
If you want to deal with an unmanageable debt, or bring a dispute to a swift and cost-effective resolution, contact James Rosa Associates, ring 0845 6807217 or email enquiries@jamesrosa.co.uk to find out whether you qualify for a free consultation.
Please be advised that all views expressed in these posts are those of the author and not of James Rosa Associates ltd.