Debt consolidation ‘now a priority for middle earners’

Middle earners are the group most at risk from the economic, fiscal and employment changes of the past few years, it has been claimed.

People earning between £25,000 and £50,000 were very comfortably off a few years ago, but the recession, cuts in public sector jobs, along with changes to tax and benefits have all taken their toll, research by pensions firm Friends Life has found.

Its study – entitled Coping Classes – has revealed the typical person in their group would not cope more than six months if they lost their income.

Such a situation may have major implications for the way this demographic considers its finances and its response in this area has been seen by executive director of operations at the firm David Hynam.

He stated: "We are now seeing them take clear, decisive and urgent steps to address this," noting this group is unlikely to regain the support once offered by the state any time soon.

Mr Hynam went on: "Most striking is the new attitude towards debt. We are witnessing a slow march down the debt mountain, which will have huge implications for financial planning and for the financial services industry."

This approach of prioritising debt consolidation may be closely related to the fact so many think they would not cope long if their finances took a turn for the worse.

And evidence that this group is at risk was provided in a recent report by credit reference agency Experian.

This concluded that middle class people who are married with children and living in the suburbs are now the group most likely to suffer personal insolvency.

By James Francis