New report reveals money worries in North East

The majority of people in the North East reject Chancellor George Osborne's claim that the economy has moved from 'rescue to recovery'

Stefan Rousseau/PA Wire Chancellor George Osborne
Chancellor George Osborne

Many people in the North East reject Chancellor George Osborne’s claim that the economy has moved from “rescue to recovery”, a new report reveals.

The report by insolvency group R3 also reveals a sharp rise in the number of people in the region who struggle financially between paydays.

The research revealed 48% of those questioned rejected Mr Osborne’s economic recovery claims made in a speech last year - above the national average - while 35% agreed with the Chancellor.

Almost half of those questioned said they often struggle to make their finances last until payday, with the rising cost of living cited as far and away the most common cause for this.

Steve Ross, chair of R3 in the North East and partner in the restructuring team at Sunderland-based Baker Tilly Business Services, said: “Optimism about the wider economy still isn’t entirely filtering through to how people in the region think about their own bank balances.

“The rising cost of living, credit card debts, and rent costs are all preying on the minds of consumers, many of whom are finding their financial breathing room is becoming smaller and smaller.

“Meanwhile, individual insolvencies have begun to rise again, as has consumer borrowing for the first time in a number of years.”

A fifth of people in the region say they think their personal financial situation will worsen over the next six months, while 22% believe it will improve in that time.

The research also found that 29% of adults across the region are without any savings to fall back on, while nationally, people in the 35 to 44-year-old age group are most likely to be in this situation.

Across the country, 18 to 24-year-olds face the biggest problems with rent payments, with 28% of those in this age group who struggle to make it to payday saying rent is the reason for their difficulties.

Mr Osborne opened his Spending Review in 2013, explaining the coalition had brought the deficit down by a third, helped a record number of people into work and “taken our economy back from the brink of bankruptcy”.

And the Chancellor told the House of Commons that Britain was moving out of intensive care “from rescue to recovery”, before he set out plans with three key terms - reform, growth and fairness.

But Mr Ross said a few quarters of economic growth will not make up for the impact the two-decade-long consumer credit bubble has had on the region’s household finances.

He said: “Savings are low, there is still a worryingly high level of household debt out there, and if wages can’t keep up with the rising cost of living, more and more people will feel like they’re being left behind by growth.

“The relatively high number of those in middle age without savings risks creating problems now and in the future.

“Those without savings will struggle to deal with financial shocks, like job losses, and if this age group can’t rebuild their savings over the next few years, we’ll be seeing a large number of people reaching retirement without any savings to fall back on.”

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