Low interest rates help households avoid debt problems

14/12/2009

More people are avoiding serious debt problems'>debt problems thanks to low interest rates and a resilient job market, the Bank of England has said.

In its quarterly report, released today, the Bank said that unemployment has not risen by as much as was originally expected during the recession.

The findings showed that a "substantial element" of the UK workforce had staved off redundancy by accepting smaller pay settlements in the short term.

Contributing to a slowdown in earnings growth, the bulletin found that over a third of workers have received a basic pay freeze in the last year.

This, along with a record low base rate, has contributed to a slight fall in the proportion of households falling into difficulties.

However, debt management firm EuroDebt is concerned that this may merely be a temporary lull.

Kevin Still, director of the firm, said: "For many people it may be that low interest rates are simply delaying serious debt problems - unless people are using the reduction to accelerate repayment of existing unsecured debts.

"EuroDebt is seeing a general squeeze on disposable income, and income not keeping pace with rises in expenditure will not help."

• Share
• 
• 
• Store
• 
• Follow
•