April 23, 2020
This latest report from UK think tank Centre for Cities looks at levels of debt in people living in large cities and towns.
The economy now faces its most difficult period in living memory and one in five jobs in large cities and towns could be lost or furloughed. This puts people with higher levels of household debt in particularly precarious situations. While consumer debt is not necessarily a cause for concern, the inability to pay it off – or problem debt – is. Our latest research finds that people in large cities and towns in Northern England and Wales are in the most debt and will be hit hardest in the economic downturn. Where do people have the highest level of household debt relative to their incomes? In Northern England and Wales’ cities people have the highest levels of debt relative to their incomes. On average, for every £5 people earn in Warrington, Swansea, Sunderland and Wigan, they owe around £1. Meanwhile in Oxford and Cambridge, people owe just 35p for every £5 they earn on average. Economically weaker cities hit hard by Coronavirus also have the most people struggling with problem debt, defined by the issuing of court judgements (CCJs). While Ipswich, Liverpool and Hull top the chart, all but one of the places with the smallest proportions of people with problem debt are in Southern England where pay is higher and the economic impact of Coronavirus is weaker. Even before Coronavirus hit, many cities outside the South East saw steep increases people suffering from problem debt. Newport saw the sharpest rise of all – an increase of 2359 adults per 100,000 since 2013. Southend and Basildon saw the smallest increases in problem debt, while York is the only northern city that hasn’t seen a sharp increase. These high debt increases leave people particularly exposed to income shocks such as redundancy or furlough. The roots of this problem debt crisis lie in the 2008 Financial Crash. However, a decade of squeezed pay, flat productivity, welfare cuts and a more aggressive approach to debt collection have made it worse.Read Full Report
By Jonathan Cribb; Tom Waters; Thomas Wernham; Xiaowei XuRead more