Debt repayments 'priority'

15/01/2010

Paying off debt is taking precedent as worries mount following reports that the UK is once again losing faith in the economy for 2010.

More people are prioritising paying off their non-mortgage debt than this time last year; the survey found that 42 per cent have begun to deal with debt faster than previously.

Almost a third of people questioned in a survey from the Association of British Insurers (ABI), expect that the economy will worsen in 2010.

Dr Rebecca Driver, ABI's chief economist and director of research, commented: "Seven-in-ten people feel that they would cope badly financially if they lost their job, with four-in-ten admitting that they had not made adequate financial provisions to enable them to cope with a large, unexpected expense."

She added: "This is not because people are spendthrift - the majority would prefer to go without than get into debt, and there has been an increase in the number of people expecting to pay off their non-mortgage debt at a faster rate than compared to a year ago."

The comments follow reports from the British Chambers of Commerce (BCC) which suggested that the UK economy needed to "re-balance" before it would see any solid improvement.

Director of EuroDebt Kevin Still said: "The ABI survey seems to reflect the mood of consumers with savings and those that are heavily indebted.

"People that would rather get into debt than go without should probably take a reality check, as lenders are less sympathetic to those that have deliberately become over committed rather than those who have had a change in circumstances. The millions of people worried about job security probably fit into this category."

He added: "Loss of income remains EuroDebt’s primary debt reason for people starting a Debt Management Plan or an IVA."

Tags; Debt Management and Banking,

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