Millions face debt timebomb and face losing everything over borrowing and bills

28 July 2023 , 23:01

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Millions are struggling amid cost of living crisis (Image: Getty Images)

Almost eight million people are thought to be teetering on a financial cliff-edge. Consumer group Which? has warned of a debt time bomb after household bills rocketed. The families it classes as ‘Drained and Desperate’ earn less than £20,000 and cut back by skipping meals. But Which? also has concerns about the ‘Anxious and At Risk’ group, which accounts for 7.9 million adults.

These tend to be from large families, have children and have managed to stay afloat by using credit. Which? says they are much more likely to have borrowed money to maintain basic living standards rather than limit food and energy. But with interest rates still rising, they may soon start struggling. Almost 40% of this group has a mortgage or loan on their home. A fifth of those with a mortgage are on a variable tracker, meaning their rates are hiked every time the Bank of England base rate rises.

One woman from northern England said: “I have to use credit to make ends meet and I do worry about debt. I have no safety net for emergencies and I will have to work past state pension age.” Rocio Concha, director of policy and advocacy at Which?, said: “Until now, the Government and policymakers have rightly focused on supporting the millions already failing to make ends meet. But this Anxious and At Risk group is a ticking time bomb.

“They are far more likely to have relied on borrowing but with interest rates continuing to rise, it’s only a matter of time before they find themselves facing serious hardship. The Government must help those most in need by tightening regulation on ‘buy now, pay later’ loans and ensuring businesses are doing everything they can to ease pressures on household finances.”

Graham Hiscott