Unemployed can face 'severe debt problems'

Last week, we reported the number of people without work in the UK is 2.51 million. Over the three months to July, youth unemployment rose by 78,000 to 973,000.

Losing your job can seriously affect your finances, especially if you have no savings, and MAT (Money Advice Trust) reports that 7.2% of unemployed 16-24 year-olds will face 'severe debt problems'.

Walesonline.co.uk, meanwhile, reports that as many as one in eight newly unemployed people of all age groups will experience 'severe debt problems'.

Today, as household budgets are tighter because of inflation, many people find it's becoming more difficult to put money aside for a rainy day - and this can lead to debt problems if you lose your job.

The Chief Executive of the Money Advice Trust, Joanna Elson OBE, said:

"A young family can be competently managing their monthly budget, paying their bills and keeping on top of credit agreements, until unemployment brings a large reduction in income and sets them off down a dangerous spiral towards a serious debt problem."

Recent research from insolvency trade body R3 indicates the greatest fear of redundancy is in the public sector. As many as one in five public sector workers live in fear of redundancy. By comparison, only one in 11 private sector workers fear redundancy.