Positive news emerging this month of growth in average real wages across the UK should be tempered by a wider view of other financial issues and trends, according to the October 2019 Money Statistics, produced by The Money Charity.
According to The Office of National Statistics, nominal wages (both regular and total) increased by 3.8% in the year to August 2019. With inflation currently below 2%, this means that real pay, the purchasing power of average pay, grew by around 2.0% over the year so far. After a decade of pay restraint, this will broadly be seen as good news, although average real pay is still below its 2008 pre-crash peak levels.
Other typical measures of the economy, such as total lending, house prices, GDP, and employment, have remained relatively flat over the previous two quarters of 2019. Along with an ongoing fall in the Conference Board Leading Economic Index® (0.5% in August and 3.0% in the six months to August), indications are that the economy will remain subdued in the months ahead.
Despite the improvement in real pay, there were signs of increasing debt stress, with Citizens Advice reporting a 14.3% increase in debt advice cases in England and Wales in September 2019, compared with the same month the previous year. The most frequent debts affecting Citizens Advice clients were listed as Council Tax arrears, credit, store and charge cards, and fuel debts. This matches a trend, observed and reported on by debt advice charities, of people struggling to pay their Council Tax and utility bills.
In Scotland during 2018-19, debt enquiries were Citizens Advice Scotland’s second-largest category after benefits. In Northern Ireland, the top three debt categories dealt with by Advice NI’s Debt Action Service were mortgages, mortgage shortfall (negative equity), and credit cards.
Early 2020 will see the Financial Conduct Authority’s new rules on persistent credit card debt reaching their 36-month action point, so it is expected that more calls for help from people with overloaded credit cards will be seen soon into the New Year.
Erik Porter, Acting Chief Executive of The Money Charity says:
“As so often in recent years, positive financial signs continue to have to be taken cautiously in balance with other factors. Wage growth is always to be welcomed, even if we are still on ‘catch up’ relative to levels from over a decade ago, but a flat economy and widening debt problems are significant concerns.
“A society that continues to struggle day-to-day with unsustainable indebtedness cannot be a financially healthy one, which is why our mission of making a positive difference through our financial wellbeing and financial education work remains as vital as ever.”
Other striking numbers from the October Money Statistics:
- The number of people unemployed in the UK fell by 134 per day in the year to August 2019. (P19.)
- Government debt increased by £154.7 million a day in the year to September 2019. (P18.)
- 14 properties were repossessed every day in Q2 2019 in England and Wales, or one every 1 hour and 43 minutes. (P13.)
Get the full picture and many more fascinating facts about money in the UK in our monthly Money Statistics.
Notes to Editors
- The Money Charity is the UK’s leading financial capability charity. We believe that being on top of your money means you are more in control of your life, your finances and your debts, reducing stress and hardship, and that being on top of your money increases your wellbeing, helps you achieve your goals and live a happier more positive life as a result. Our vision is for everyone to be on top of their money as a part of everyday life. We empower people across the UK to build the skills, knowledge, attitudes and behaviours, to make the most of their money throughout their lives. Find out more at https://themoneycharity.org.uk/
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