Consumers who are struggling to pay off their debts may find the task harder still if the recession continues, as this may impact severely on the labo…
Consumers who are struggling to pay off their debts may find the task harder still if the recession continues, as this may impact severely on the labour market.
The latest review of economic output and the labour market by the Office for National Statistics has confirmed that both the final quarter of 2011 and the first quarter of 2012 saw gross domestic product (GDP) falling by 0.3 per cent.
However, the study noted that the labour market has remained resilient in recent months as employment levels have increased, with this not just including part-time jobs but also full-time roles.
In addition to this, another benefit to consumers is that inflation is falling, with the consumer prices index rate dropping to 2.8 per cent.
However, a continued decline in GDP could lead to a reversal in this situation and if that happens, many people who are currently managing to meet their monthly payments will suddenly find they are struggling to do so.
People whose debts rise to £15,000 and higher may find an individual voluntary arrangement is the best option for tackling a situation that is spiralling out of control.
These work by negotiating lower repayments to creditors to be made over a period of five years or less, after which any remaining debt is written off.
The number of people who may find their situation becomes unmanageable might increase swiftly if unemployment rises, as a recent study showed millions of families are struggling to make ends meet.
A report published earlier this week by the Scottish Widows thinktank Centre for the Modern Family found one-in five families are having such difficulties, with younger people particularly prone to getting into extreme debt situations such as those payday loans can cause.
It found that ten per cent of those aged 18 to 34 had taken out such high-interest products, compared with four per cent of all adults.
By Joe White