“Breathing Space is an important step in how society manages problem debt, however, its impact will be limited in cushioning against the potential wall of debt many will face down the line. Against the backdrop of increasingly positive news on the UK’s vaccination roll out and a potential return to normality, a more sombre and fuller picture of the pandemic’s financial impact will emerge as government support schemes and forbearance winds down.
“In the darkest days of the winter lockdowns, research showed concerning growth in the number of people facing financial difficulties, with almost half (47 percent) worrying about money every day and 24 percent feeling incapable of managing their finances. Lockdown lifted the lid on this underlying financial divide, but government support, as necessary as it was, masked the reality for those on lower incomes or facing unemployment. Now, as the tide goes out on financial support, the force of the wave of debt building since the pandemic began may be felt.
“Both people and businesses will need greater support, new solutions and innovative thinking to navigate future problem debt. The pandemic’s impact should accelerate improvements in how financial difficulty is supported, and the government’s mental health recovery plan already highlights the crucial role the debt management industry has to play. In the meantime, it’s vital for those in financial difficulty to fully capitalise on Breathing Space, and for creditors to use it as an intervention trigger to craft a sustainable, long-term customer journey out of debt.”