Personal debt in Britain £1.4tn

Personal debt in Britain has reached £1.4 trillion, according to a study by the Centre for Social Justice. Around 3.9 million British families do not have enough savings to cover their rent or mortgage for more than a month, the report says.

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Maxed Out: A study of Britain's personal debt

According to a study by the Centre for Social Justice:

  • Personal debt in the UK stands at £1.4 tn with an average household owing £54,000, compared with £29,000 a decade ago
  • Unsecured consumer debt has almost tripled since 1993, reaching nearly £160bn
  • Poorest 10% of household in the country have average debts more than 4x their annual income
  • More than 8 million households now have no savings at all
  • 26,000 UK households have been accepted by councils as homeless in the last five years because of rent and mortgage arrears, with 5,036 becoming homeless last year
  • Payday lenders have increased business from £900 million in 2008/09 to just over £2 billion in 2011/12.

Read: Personal debt in Britain £1.4tn

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Think tank: Problem debt can 'wreak havoc' on lives

Years of increased borrowing, rising living costs and struggling to save has forced many families into a debt trap that is proving very difficult to escape.

Problem debt can have a corrosive impact on people and families. Our report shows how it can wreak havoc on mental health, relationships and wellbeing.

Across the UK people are up until the early hours worrying about their finances and bills.

Some of the poorest people in Britain are cut off from mainstream banking and have no choice now but to turn to loan sharks and high-cost lenders.

– Centre for Social Justice director Christian Guy

Read: Personal debt in Britain has reached £1.4tn

Average UK household debt has risen to £54,000

Household debt has almost doubled in the last decade Credit: Press Association

Household debt has almost doubled in the last decade as more families struggle to pay their rent or mortgage, the Centre for Social Justice has warned.

The think tank - founded by the Work and Pensions Secretary Iain Duncan Smith - said British households now owe an average of £54,000, an increase from £29,000 a decade ago.

The study also found households in the poorest 10% of the country have average debts more than four times their annual income, with their average debt repayments amounting to nearly half their gross monthly income.

Study: Personal debt in Britain has reached £1.4tn

Personal debt in Britain has reached £1.4 trillion, according to a report by an influential think tank.

According to a study by the Centre for Social Justice, around 3.9 million British families do not have enough savings to cover their rent or mortgage for more than a month.

Rising personal debt has become a "significant problem" for people in Britain, the report warned. Credit: Press Association

More than 26,000 UK households were accepted by councils as homeless in the last five years because of rent and mortgage arrears, including more than 5,000 last year, the think-tank said.

Its report, Maxed Out, said poor people were bearing the brunt of a "perfect storm" of rising living costs, falling real wages, low savings and expensive credit that has seen unsecured consumer debt almost triple in the last 20 years, reaching nearly £160 billion.