One in five people would have to borrow money if they needed £200 at short notice, new research from the University of Birmingham shows. According to the report, the financial crash of 2008 and the following austerity measures have resulted in very little capacity to meet unexpected expenses, even relatively small ones’. But the most […]

Ashley is Redbrick's Digital Editor. He is Editor of the Selly Oak Magazine and an English student at UoB. He has written for the Guardian and the Independent.
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One in five people would have to borrow money if they needed £200 at short notice, new research from the University of Birmingham shows.

According to the report, the financial crash of 2008 and the following austerity measures have resulted in very little capacity to meet unexpected expenses, even relatively small ones’.

The University’s Financial Inclusion report found that:

Most people are cutting back on their spending

30% of households are finding it difficult to manage

Unsecured borrowing is up by 10%

27% of people were ‘just about getting by’

But the most startling findings, according to the report, were in regard to meeting one-off expenses. 20% of the population would have to borrow £200 at short notice. Sources include informal loans from friends and family, as well as formal loans, which may be from credit cards, overdrafts or loan companies.

The report blames insubstantial benefits as one of the main reasons for people seeking such loans. It said that means-tested benefits for single people out of work gave them only 38% of the income they would need for an acceptable standard of living, whilst a couple with two children had only 58% of what they would need.

Professor Karen Rowlingson, lead author of the document, said, ‘it is frightening that some people, particularly young people, might tip over the edge into problem debt, to meet a relatively small expense.

‘Financial insecurity is on the rise and the situation looks set to worsen’

As wages stagnate and benefits are cut, financial insecurity is on the rise and the situation looks set to worsen further unless the government does more to support those who are struggling to make ends meet.’

The report concludes that ‘this is the longest and deepest slump in a century, with the slowest recovery and we are already seeing signs of a major impact on people’s finances. The situation looks set to worsen still further in coming years unless the government takes action to better support those who are struggling to make ends meet’.

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