London is the debt capital of Britain, with more than a half a million of the city’s residents over-indebted, a report claims.
The new report from StepChange debt charity, London in the Red, is based on in-depth analysis of more than 15,000 of the charity’s clients.
It found the average debt among the charity’s London clients was £12,402 – 3.5 percent higher than the average for StepChange’s clients across the rest of the nation.
The charity estimates that debt costs the London economy £1.4bn, including extra costs from housing, unemployment, mental health and relationship breakdown.
Almost one in every five Londoners seeking help with their debt problems faces contractual repayments on credit cards, loans and other unsecured debts which amounts to more than their entire net monthly income.
Housing-related debts in the city, in the form of arrears on rent and mortgage payments, are greater than that of the rest of the UK, by an average of £1,512.
The report also showed that London clients on average are £66 short of being able to afford their essential bills and credit commitments each month, whereas nationally clients are only £15 short on average.
The debt charity concluded by saying the major reason behind this difference is that although the average income of the charity’s London clients is almost the same as across the rest of the UK, people in London face much higher living costs.
Mike O’Connor, chief executive of StepChange debt charity, said: “Debt can affect anyone at any time, regardless of their income, and it can bring with it severe consequences for individuals and their families. The problem is particularly serious in London, where rising living costs and sluggish wage and cuts to benefits have combined to leave people financially vulnerable and with little hope of building up savings or owning their own home.
“The streets of London are more likely to be paved with debt than with gold.”