North ‘to be hit more by debt problems’

Northern parts of Britain are set to be the ones where people face the worst debt problems this year and next, according to a new report.

The Money Advice Trust has predicted those parts of the UK where the greatest proportion of jobs are in the public sector will suffer most, due to the greater impact of cuts in national and local government spending.

Chief executive of the trust Joanna Elson stated that unemployment is a "major driver" of financial problems and therefore areas with high unemployment are set to suffer most – such as Northern Ireland, the North East and Wales.

She remarked: "Those areas of the UK that are likely to see unemployment grow as a result of public sector cuts are likely to see a correspondent growth in debt problems."

Demand for debt help will increase by as much as 40 per cent in such regions by the end of 2013 and the overall total of people asking for assistance from organisations like the trust will reach 1.7 million this year, the report predicted.

And even this "doesn't reflect the true number of people facing financial problems this year", Ms Elson added, suggesting many who have financial difficulties are not seeking help.

She stated that the figures revealed in the report are likely to be accurate estimates, based on the experience of a similar study last year carried out with help from University of Nottingham researchers, which were correct to a margin of 0.01 per cent.

The impact of rising unemployment on debt may be a very substantial one, as a report published this week by the British Chambers of Commerce indicated the UK is set to see joblessness go on rising as high as 2.9 million in 2013, compared with the latest figure of 2.67 million.

Such an increase would see the proportion of the workforce out of a job rising from 8.4 per cent to nine per cent.

By Joe White