Are Britons borrowing beyond their means?

Precious Plastic 2017

One year on from the EU referendum, unsecured debt has grown faster in the past year, rising by 11%, or £79m per day, than any since 2002. Compared to secured debt,  unsecured debt has also grown at least three times faster for each of the last five years. 

Car finance has grown by at least 15% for each of the past five years which represents the largest increase among the main unsecured lending products. While banks provided broadly the same level of unsecured debt as they did pre-crisis, nonbank lenders, such as peer-to-peer, have doubled their lending volumes.

While the level of concern among consumers is low in the context of the past decade, there has been a slight increase in concern across almost every measure. Consumers are also more concerned about Brexit than they were a year ago and more cautious about borrowing in the future.


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Simon Westcott talks about the current levels of unsecured debt in the UK, the risks and possible solutions.

Should we be worried about the levels of debt?

Over half of consumers surveyed in September 2017 expect the Bank of England to raise interest rates within the year but only around a third said they were worried about the impact of a rise.

Whilst we do not foresee another recession, we do expect the growth of the economy to slow as the UK faces the impact of uncertainty surrounding Brexit. This has also had an impact on inflation and the weakening of the pound, and consequently consumer appetite and the ability to borrow may be affected if this continues.

Consumer Credit Confidence has remained strong, despite the continued rise in unsecured debt

Our Consumer Credit Confidence Index, which brings together all the key aspects of the survey into a single, consolidated measure, demonstrates a trend of increasing credit confidence in previous years which is starting to taper off. This increase in confidence raises concerns since it has occurred alongside the increase in consumer debt over the same period.

While the level of concern among consumers is low in the context of the past decade, there has been a slight increase in concern across almost every measure.

Issues of persistent debt are rising and certain consumer groups are already at risk

Aggregate affordability measures typically hide issues of persistent debt. 

Certain consumer groups are more likely to express concern about the debt they hold.  For example, adults aged 25-34 are three times more likely to use credit to spend on essential items and to express concern about making repayments on future debt.

In addition, the inability for some consumers to deal with a change in circumstances should also pose concern. Consumers that struggle to keep pace with their unsecured debt repayments are often exposed to unforeseen shocks and events.

Levels of financial understanding in the UK need to be improved

As Britain’s debt burden expands further, low levels of financial literacy raise concern that we do not know what we are getting ourselves in for.

Our survey of over 2,000 UK adults reveals a wide range in the level of understanding of financial products. And a lack of understanding was particularly low for younger respondents, who may feel they are not being offered appropriate guidance.

Just 6% of the adults we surveyed said they had received any formal education at school about how to manage their personal finances. The introduction of financial education to the national curriculum in the UK in 2014 can be seen as a positive progress. However more needs to be done.

Contact us

Simon Westcott

Retail and commercial banking, PwC United Kingdom

Tel: +44 (0) 7595 610434

Richard King

Strategy, PwC United Kingdom

Tel: +44 (0)20 7804 8188

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