Each Person in UK Over £60,000 In National Debt

In a stunning new report that has now been released by the Office for National Statistics, the national debt in the United Kingdom has been broken down into the cost per individual in the nation today. It turns out that at the current rate, with £4 trillion owed, each person in the country is carrying £65,000 each in state level debt. That means every single man, woman and even child in this country is bearing that much per person and this is actually double what independent analysts, who are generally more harsh with their figures, have estimated in the past. Put this way, people are a bit shocked to discover that despite whatever they earn and whatever level of debt they are personally dealing with, it is £65,000 at the state level that they are trying to pay down every time they pay their taxes.

At this level of debt, the average family in the UK would need to work for a full 5 years to pay off their selection of the national debt – not a pleasant thought for families with steep credit card or overdraft to pay already. Margaret Thatcher was famous for advising that the Government treat its own finances the way a real British household would and this study confirms her suspicions about the severity of debt in the nation today. With more people being forced into bankruptcy it turns out that the former Prime Minister just may have been on to something.

Some blame Labour and the Private Finance Initiative system for increasing the debt and the bailing of the banks during the massive global melt down that reached Britain. For others, it is the tax funded public sector pension and state pension schemes that they believe are making the trouble. Since the total value of the Government’s assets now is just under £1.4 trillion for every single office, council house, air craft, ship, vehicle, railway, school and hospital – plus all the land the state owns. That is not a very inspiring thing to see but it is the fiscal truth of the matter and signals that Britain may be in some rather grave danger if the course is not altered very quickly.

The rest of that £4 trillion in debt? It comes from the £2.5 trillion put into taking over the Lloyds Banking Group and the Royal Bank of Scotland and other expenses in the public sector. The Treasury is being accused of playing shell games to try and hide the amount of debt the UK is currently facing, but there can be no truth until the official review in October when a more accurate assessment of the financial state of the UK can be done.

UK’s Public Sector Hiding 4 Trillion Pounds of Debt?

It has come to light that the debt from the public sector in the United Kingdom could be a full £4 trillion higher than previous estimates had set it at. This means that the scale of the challenged faced by today’s Government is a great deal larger than many analysts had previously believed. While many had thought that £903 billion was the official debt, it turns out that more than £4 trillion in liabilities is called ‘off balance sheet’ debt, but is still debt nonetheless. This means that the public has been living under the false notion that things were better than they were and if not for the Office of National Statistic, these facts would have been in the hands of political figures who often tend to arrange figures to suit their goals when it comes to making things look in a way that they hope will impress the public.

These liabilities are coming from the stakes that the Government now owns in Lloyds Banking Group and the Royal Bank of Scotland, themselves well into the £2.5 trillion territory alone. David Hobs, speaking for the ONS, said that it is crucial the Government be transparent about the liabilities so that citizens are aware of all the different obligations and the contingencies that must be dealt with even if those figures are not always put onto the debt balance sheet. Unfunded public service pension programmes and also the unfunded pension schemes add in another $2.5 trillion or so to the national debt. These facts and figures are a very key aspect of keeping a clean balance and without this knowledge it is tough to make intelligent decisions about the national debt at the consumer level. There are plenty of other things such as a nuclear decommissioning plan that will cost £40 billion and all sorts of other, smaller costs hidden in the mix.

Now, it needs to be understood that these liabilities are potential costs rather than straight costs, but they cannot be over looked for true public accountability, said Hobbs. Spending cuts are also going to play a big role and after the recent reports from both the Centre for Economics and Business Research as well as the Institute of Chartered Accountants in England and Wales, things are getting stickier for the Government and the media is eating it up. Stable public financing is crucial to a stable economy and the managing economist from the Officer for Budget Responsibility, Charles Davis, has said that totally assessing the debt is just as crucial at the national level as ever before.

Britain’s National Credit Rating Could Be On Way Down

Things are not looking good in the United Kingdom right now as the big shot has been taken at George Osborne by Standard & Poor’s: they are looking to down grade the credit rating of Britain from AAA to a notch below if the Chancellor cannot manage to get the national debt under control somehow. Knowing this is taking place at the national level certainly brings into greater clarity the struggles that average folk are experiencing at the ground level end of things, say analysts. The fact that a towering debt has piled up for the UK means that there were some poor decisions made in the past and many of these have put the UK in a position where borrowing might mean higher interest rates and, just like at the consumer level, higher interest rates help debt build that much faster. Unfortunately for the nation there is no large scale IVA like consumers are able to use to help get themselves out of debt in a reasonable time.

Since the ratings group of S & P is able to make these calls, it makes the economists wonder if perhaps the current Government has not greatly overestimated their idea of a national recovery and even if such an event is taking place right now, just how strong it truly is. Many have said that the judgement of S & P is a shame on Osborne and his government because they gambled on the future of the country and may lose a lot of face in the financial markets around the globe. Now it appears that Osborne is out to set things right by making improving the national credit rating a top priority of his policy. How is he attempting to make sure that things are set right? It appears that what he is setting into action are very sharp cuts in public spending – some of the most severe seen in generations.

During his run for office, Osborne wanted the British public to judge his leadership based on his ability to protect the UK’s credit rating, but since the negative outlook from S & P has been maintained, it is looking like Osborne faces the biggest deficit ever recorded in Britain during a time when a major world war was not in progress. The mere news of the impending S & P downgrade sent the pound sterling’s value down by a half cent – surely not a positive thing.

However, things were not all doom and gloom as the S & P group did manage to say that the framework the government has set up looks to lead to a stronger financial future, although critics loudly chant ‘At what cost?’ It will not be until October that things are really put to the test during an official review of spending when all will be revealed as to how effective the cuts have been. The Office of Budget Responsibility predicts a faster recovery than S & P does, so October will be the time to see when things could be going in the right direction. Since the debt’s cost could well reach 70 per cent of the nation’s annual income, and household incomes may not be able to keep up in order to provide the tax money – things could be bleak, but many hope that things will right themselves in due time.

Concerns Grow Over US Debt Collection Abuse Being Emulated in UK

In the United States, harassment by debt collectors is reported to be on the rise. This news comes despite the fact that, like the United Kingdom, the US has laws which specifically prevent debt collectors from harassing those they are attempting to collect from. Since debt collectors are unable to obtain the money they are after from a population facing rising unemployment, they have resorted to far less savory tactics that some experts in the UK say could soon be used on citizens here.

As the debt collection agencies continue to sprout up in both the UK and the US in response to growing consumer debt and the economic uncertainty that comes along with the loss of a job. The economy at the global level may be back on the upswing according to some analysts, but the fact remains that many in both the UK and the US are facing the loss of their jobs as companies continue to shrink their labor force and deal with their own business level debt woes.

All of these factors press on the debt collecting outfits that are outsourced by companies to bring in past due accounts. Since these groups get a cut of the debt due to the companies that hire them for the job, they are often desperate to get that money to keep their own operation afloat.

Now, it appears that these companies are going further in what they are allowing their workers to do as far as behavior towards those debtors they are charged with collecting from. While this may be a simple lack of oversight and supervision, it is certainly abusive. In the US alone, complaints to that nation’s official body which monitors the activities of the debt collecting industry have risen a full 50% in 2009 alone. This is an enormous figure that does not bode well for the debt collection industry and is happening in the face of laws which specifically detail not only what collectors are allowed to say to debtors, but the times they may call them, as well.

Abusive language is the primary complaint, including threats to reveal a consumer’s information to third parties in attempt to damage their credit worthiness with other businesses. The creditors have been placing back to back calls in an attempt to force debtors to pick up the phone and also calling at off hours to try and catch them off guard. Some consumers have actual recorded voicemail messages of creditors making threats to their property and person – recordings that will surely lead to a very quick and simple lawsuit for those creditors.

Beyond this? There are incidents of credits enacting physical violence against those who refuse to pay them. These lowest of the low creditors generally attempt to collect with rising threats that include jail time, something that is not actually allowed by US laws. Then, if the debtor is unable to pay off the debt plus an extra amount that the collector concocts, they have gone so far as to call that person’s relatives and extended family member to try to obtain the money.

All of this is far beyond what the law allows which is exactly the point. If this is taking place in America, it could very well take place in Britain, a country where plenty of people know about the nasty tactics debt collectors have employed in the past.

So what is the bottom line for consumers? Avoid the debt collectors altogether by entering an IVA or opting for a Debt Management Plan which can legally stop those harassers from being able to call or contact the debtor. Experts suggest that for many this is the quickest route to avoiding these people because even the best intentioned debt collector brings stress into UK families when money is already obviously a problem. If consumers get in on the easy way out of debt now, say UK experts, the debt collecting industry can do nothing to them and they will be debt free in just a few years. For many this is the solution they hoped for.

Summer Holiday Leading to Massive Debt for Many in UK

The stats on the number of adults living in the United Kingdom who will go into debt in 2010 in order to pay for a summer holiday are simply staggering. According to a survey conducted by a UK insurance firm that number stands at 10 million people, all of them adults, who are going to knowingly enter into debt in order to fund their holiday through credit cards, borrowed money from friends or family, bank overdrafts and the payment plans offered by travel agents.

While that might sound reasonable enough, the survey went deeper than this and discovered that half of these individuals know that they will not actually be able to repay what they borrow any time soon. With the extra interest charges that will accrue, credit card borrowers alone will be paying hundreds of pounds extra for their holidays by the time they are finally able to pay them off. Of course, the credit industry is celebrating because this is terrific news for them, but is it wise for the 5 million adults who simply wanted to take a break this summer?

Here’s where things go from ‘understandable’ to utterly ghastly. The fact is, many of these adult spenders are using cards that have a 0$ introductory interest rate that eventually rises to 18% or more in terms of its APR over time. Since most in the UK are currently finding it tough to pay off any expenditure on credit cards in a rapid fashion – and including the fact that this is probably not the only purchase charged to their card – that ends up being a very hefty rate for borrowing money indeed.

The statistics show that the average person in the UK will spend a little over £1,100 for their much needed break and at the rate they are borrowing, not including other purchases which can jack up the balance, they will be paying £100 or more on top of the cost of the initial purchase. Experts advise against this method of funding and instead cite instant access savings account as a much better way to pay for a summer holiday – in advance. A few pounds tucked away per week could buy a much better trip in cash.

In addition, another note that spenders should take into consideration is the added cost of using their charge card while overseas. A great many credit card companies apply extra fees for processing transactions made abroad and this means that consumers need to find out in advance if what they buy while they are away will either nullify the 0% offer or even add additional fees to the cost of what they have bought.

Consumers are also wise to keep any purchase they make over £100 in order to keep themselves inside the Consumer Credit Act’s Section 75 which specifies that they have additional protection if they make a purchase on goods or services that falls between £100 and £30,000.

Summer holiday savings plans may not appeal to every adult in the UK but they could certainly help any adult avoid debt altogether.

Experts Cite Need for Debt Consolidation As Calls for Help Increase

It is still hard times in the United Kingdom despite the pundits talk of the economy getting better. While percentages look good in the papers, the real problems continue to mount at the consumer level. The fact is, for quite some time Britain has been living off the credit system and consumers were greatly encouraged to pursue its use as a means of helping them achieve a lifestyle that they would be able to pay off in due time. Unfortunately for many families, that time never has arrived. Instead, consumers are saddled with tremendous debt along with a shortage of jobs.

This has led to a massive influx in calls to debt advice firms even since the beginning of 2010 – the same time the economy was supposed to be getting better and debt at the consumer level was supposed to be getting paid off. Instead, it appears as if the debt which is written off as a matter of course during a standard Individual Voluntary Arrangement is being counted into these figures as some sort of proof of diminishing debt. When the math for this formula is compared with the reality that even more consumers are facing store card, overdrafts and credit card debt, the picture looks a great deal different.

The fact is, the budget that most consumers are used to living on and enjoyed throughout the 1990’s was used as a model for the first decade of this new millennium when it does not suit the economic climate. As a result, many consumers are in dire shape as they attempt to get back on their feet. The freeze on standard child benefits and all sorts of new restrictions on benefits for housing are adding up along with the sudden rises in the VAT and we enter a situation that is far from ideal for today’s consumer.

Changes in benefits always strike hardest at those who are living closest to the edge of dire poverty. Clearly, not all families are in this demographic, but for those who are life can be very tough when the government and economics continually work against them. Hence, they seek out debt advice as some sort of way to try to pull their family from the struggle that even a single missed week of work can bring on those families that are riding the very edge of financial solidity.

Everyday living costs are on the rise, as well, as other countries that manufacture goods attempt to adjust their economies to deal with the new global reality. Without the disposable income that British society is used to having, it can be incredibly tough to deal with the upheaval in the economy that is currently affecting everyone in the UK. Experts say that the key for those in trouble is to realize that there are solutions and plenty of them can be found for those consumers who want to be able to rebuild their credit so that they can one day obtain a home and avoid bankruptcy with all the hassles that follow it.

By entering into a protected debt pay off solution, consumers can get back on their feet a lot quicker than most of those recently polled realized. The efforts are going to pay off for those who make the change now before the next potential wave of economic upheaval ever has a chance to strike.

Second Round of Global Economic Meltdown May Be on the Way

Things are looking extremely rough and dangerous for the global financial markets as it turns out that a new wave of the recession which started shaking the world in 2008 may be headed back around for another shot at what many economists are referring to as a second Great Depression. With the yield on 2 year United States Treasuries falling to a new low on the records in hopes of some solid ground, 0.61 per cent to be precise, experts are stating that this is as low as the Great Depression that struck during the 1930’s. Just as some were beginning to say that Wall Street was looking good and possibly about to pick up a 3 per cent growth for the 2nd half of 2010, more foul news comes. The bond market happens to be one of the key economic indicators and its performance this year is showing that any kind of global economic recovery may well be dead in the water. According to a Deutsche Bank strategist in credit matters, the issues of credit have given economists and political officials indicators of what would take place throughout the first round of the economic meltdown that now looks to have begun critical velocity during 2007.

The credit strategist went on to say that deflation has now become the most potent risk for the West and is likely going to force the central banks to start easing up in the qualitative sense once again. The Europeans will likely not do this until they have no other choice, but the Americans, says the strategist, will do it pre-emptively. The crisis in banking that Spain is not experiencing, a drop in important economic indicators for the Chinese and the steady erosion of confidence in the US markets are all working together to create something of a perfect storm for this meltdown. Paul Krugman, a winner of the Nobel prize, has warned along with other important global economist thinkers, that not only is the current recovery in danger of failing outright, but that if the North Atlantic region (which includes the United Kingdom) tightens their purses, then things could get even worse far more quickly. According to Krugman, this is the beginning phase of a 3rd depression that is the direct result of failed financial policies. He went on to say that both Europe and the US face striking deflation at the same level as Japan is well known for – and, Krugman says, the Fed is doing not a thing about these potential pitfalls.

China, meanwhile, is having their own set of problems and this is crucial since the Asian giant controls so much of the Western world’s manufacturing. With the Shanghai composite equities index falling a full 4 per cent to be 55 per cent below the peak it had at the end of 2008, Chinese authorities will work to tighten their hold over the economy and curb not only property speculation, but inflation, as well. Already, prices for homes in both Shanghai and Beijing are more than 12 times the average income, a fact which may be hard for even the savvy Chinese leadership with all its methods of control to fix in a meaningful way. Instead, the banks that are owned by the state now have a large amount of hidden debt to deal with.

Freight rate measuring tool for the shipping of bulk goods, The Baltic Dry Index, has dropped 40 per cent in May of 2010 alone and this is unnerving to many economists since it is a measurement of the flow of goods across international waters and a key indicator of global economic health. Top this off with the fact that the European Central Bank is going to shut off £361 billion in emergency single year loans, the largest amount a central bank has ever made available, and it is easy to see why economists are extremely edgy about the future. Spanish banks are unable to get their loans extended and this will mean awful things for the European nation, but a great many banks are said to be facing tragedy beyond the borders of Spain, as well.

Sources say it is only a matter of time before the 3rd largest holder of debt beneath the United States and Japan – Italy – reaches the tipping point and once debt settles there it will be a matter of time before everything hits collapse phase for monetary union.

Pension Ages to Rise at Faster Pace

In news that is surely not going to sound good to many in the United Kingdom, it turns out that the Government has just now confirmed its plans to raise the state pension age by quite a bit, for men it will be age 66 by the year 2016. According to what officials have told the press, they will also be looking into the possibility of pushing the limit higher, to age 70 and even further over the next few decades. The default retirement age appears as if it might also be totally done away with according to new reports that are sure to jostle the minds of UK citizens who had been hoping for a break in their work a day lives.

For the coalition team that is in charge of the pension policy, this is the first major word the press has heard from them. For those unfamiliar, the team behind this news would consist of Pensions Minister Steve Webb and Iain Duncan Smith, the current Secretary of State. They have made no secret that they are looking to raise the pension age for men to 66 within the next 6 years and apparently are not concerned about the way that citizens who are already struggling with massive debt loads and longer working hours to afford goods that continue to rise in cost while wondering how long their jobs will hold, will feel about this news. Those who have not yet entered into IVA programs to get rid of their debt have been advised to do so as quickly as possible since it is becoming quite apparent, say experts, that the Government has no plans to make life easier for citizens and saving up to be able to one day enjoy some free years will be far tougher to do while slowly paying off debts.

Women, also will be facing a higher pension age a few years after the age for men has been raised. The Government had already made public notice of its intent to raise the pension age to 66 by 2024, but this is 8 years later than the current proposition. By the year 2046, the Government has intended to raise the pension age to 68. The new ministers now in charge would like to see it raised to 70 as quickly as possible. Since, they claim, people are living longer then they need to be able to work longer, as well, and thus they are pushing their program to “reinvigorate retirement”.

On the other side of the fence are those who advocate these decisions because they allow workers to be able to work longer if they would like to. Those who advocate the new changes say they do not like to see companies be able to fire employees simply because they have reached the age of 65, especially when those folks wish they could work longer and enjoy the work that they do. Duncan Smith also noted that it would be a negative thing for the UK to lose the value that older workers bring to the market in terms of their experience and since they are living longer and more healthy lives they should be allowed to work longer if they wish. However, this comment was closely backed by another that suggested the true reason for the changes would be an effort to make sure the pension system does not fail as people continue to live longer and need more financial resources over the course of those ‘extra years’.

The look will go deeply into the ties between the state pension age threshold and the life expectancy of the person in question. Since today’s life expectancy is age 77 for men and 81 for women, it could be a number of other things that are coming into play that are more political than purely practical. The questions in the Budget regarding any rises in pension pay outs are also to be noted as Britain seems to get somewhat reluctant to pay its retired work force and this has caused concern for some who feel the Government are playing games to try and balance a budget that is full of misspending in other areas by taking that money from those who actually deserve it.

Public Warned Against Inflation as a Means of Escaping Debt

According to recent word from the Bank of England, Britain will not be able to inflate itself out of its sprawling public debt burden. The BoE’s deputy governor wanted to be clear on this issue after speculation over what is being called ‘hyper inflation’ lead to theories that a rise in inflation, particularly a sharp one, might somehow help Britain get out of the dire situation it now faces in terms of debt. Prices rising, deputy governor Charles Bean was quoted as saying, will not help Britain’s debt reduce itself any faster. Many members of the public have begun to create conspiracy theories that politicians use inflation as a means of lowering the debts of their nations at the international level and reducing what is owed to the capital markets. This comes backed by the commenter’s in the blogosphere who raised quite a stir after a recent announcement from Riksbank, in Sweden, that it intends to adjust its inflation target.

Some say that Britain needs to look to China for its recovery and that public finances need to be placed on sustainable ground before any real debt clearing can possibly take place. In a recent opinion piece in the Telegraph, Charles Bean let the public know that inflation should not and, in fact, can not be a sound way to reduce national debt for any country, especially the UK. Those in private debt had hoped that the inflation might also help them and Bean was clear that it would not. He called the morality of shifting debt from the hands of those who save their money to those who borrow ‘dubious’ and pointed out that inflation itself, even in small amounts has a ‘nasty habit’ of turning into far more inflation than the public would appreciate dealing with. He felt strongly that Britain should stay the course with its current inflation plans.

Pound Now Rising Hard Against the Euro as Housing Costs Increase

For a year and a half, the British pound has continued to gain against the euro as trading has reached very strong levels. According to recent reports in the UK media, house prices are also climbing to levels that are nearly as high as 2 years ago, before the economic crash that hit both the UK and the rest of the world quite hard. Optimism for the UK economy is certainly present, but this can also signal trouble for those who continue to struggle with debt and have not yet sought out an IVA or similar solution to their financial woes. Analysts advise that now is the time to take such measures for those who want to be able to own their own home because as prices rise, they rarely fall without concurrent economic troubles coming in at the same time.

Ten year gilts have fallen recently as a rally for the equities market killed demand for them and the government sold off 2 billion pounds worth of securities which are set to mature in the year 2034. Currency strategists around the world have reported that according to their data, the recovery is weak now but may be set to get stronger as more time passes. With these changes in effect, the public in the UK will certainly want to take advantage of the break in the clouds and clear off personal debts so that they can take advantage of improving economic conditions.

The Nationwide Building Society also announced that the average cost of a home in the UK has risen a half percent in May alone, reaching levels not seen since July of 2008. This is evidence that the housing market is recovering after a 20 percent value drop that took place during the financial crisis of late 2008 and 2009. Europe continues to face massive debt and their currency is showing the effects while Britain has made 6 percent in gains against the EU currency, a significant feat since 16 economies now use the euro.