Londoners defaulting on debt faster than rest of UK as borrowing used to meet rising costs
Londoners are defaulting on their debts faster than the rest of the country, as Brits are forced to borrow more at higher rates to keep up with soaring inflation.
Figures released by the Urban Institute in its Financial Vulnerability Index showed households increased borrowing in spite of interest rates going up, in a bid to cope with soaring food and energy costs.
The capital was hardest hit with a big spike in defaulting in the final quarter of 2021, up from 13.7 per cent to 16.7 per cent.
In the second quarter of 2022, there was 17.2 per cent of people in default, the highest since the index was launched in 2017, and this was 4.8 points up on the UK average.
Amid the rising cost of living, London has experienced the greatest share of adults claiming social benefits, with 12.3 per cent doing so in the second quarter.
The rise in financial vulnerability in the capital stated during the pandemic, and has led to Lowell UK, a debt collection firm, calling for the next prime minister to offer more financial help to those facing economic woes.
“With a substantial share of adults claiming benefits, increasing credit usage then defaulting, we have a situation in London where people are struggling to make do with what they have. This has been exacerbated by rising costs, which has forced people to turn to credit more and more”, said John Pears, UK CEO at Lowell.
“The new government needs to take action to ensure households, especially the lowest incomes, get the support they need. With the recent changes to the price cap, bringing energy bills down has to be the priority. This needs to be at the top of the agenda.”
As well as rising food costs, Brits, and Londoners in particular, are facing an 80 per cent increase in the energy price cap which could plunge millions into fuel poverty.