Millions of UK households fear that 2014 could be their worst financial year. New information reveals that millions of UK households relied heavily on credit to pay for Christmas presents after a year of increasing living costs and flat lining average incomes.
Consumer group Which? recently found that over 13 million UK adults were only able to afford their Christmas spending using credit. An increasing number of UK adults are turning to high-interest credit options such as payday loans as most of their other credit options, including credit cards, run dry.
UK households have been set back by a rising cost of living combined with incomes that have not increased by any substantial margin over the past three years. Many homes are earning less in real terms than they were five years ago, despite efforts made by the government to improve income stability and employment.
Only three in ten UK households expect that their financial situation will improve in the next year. Six in ten households are fearful that the growing cost of energy could make their winter utility bills a major strain on household finances. Alarmingly, four in ten UK borrowers are now using credit to pay for necessities such as food.
Three quarters of Christmas borrowers claim that they spent most of their credit on presents. Data reveals that Britons have, on average, £2,875 of credit card debt as of the beginning of the year. Experts estimate that 40% of borrowers will spend more than a year repaying their credit card bills due to Christmas spending.
Despite the household doom and gloom, experts are confident that the UK economy will improve in 2014. PricewaterhouseCoopers believes that the economy is likely to return to its pre-recession level for the first time in the final quarter of the year, leading to long-term economic improvement for many UK households.