The latest UK debt statistics, courtesy of Credit Action, show two interesting trends.
Firstly, the “write-off rate” on consumer lending by UK monetary financial institutions to individuals increased further in the second quarter 2010 to 7.4%. In this quarter, UK banks and building societies wrote off £3.47bn, most of which was credit card debt. In the 12 months to the end of August, they wrote off £10.9bn of loans to individuals.
Secondly, they reported that average household debt in the UK is ~ £8,590 (excluding mortgages) but this figure increases to £17,896 if the average is based on the number of households who actually have some form of unsecured loan. That’s a drop from £22,000 when I last looked, about 6 months ago, which shows clearly that people have been paying off debt.
By the way, if we include mortgage debt, then average household debt in the UK is now about £56,690.
The report concluded that total UK personal debt at the end of August 2010 stood at £1,428bn, a slight increase. Based on that, the people at Credit Action still make the statement that I quoted in my book “Back to the Black”. In their words: “Individuals owe more than what the whole country produces in a year.”