Good news at last – household debt is falling fast

Thre's not much good news around at the moment., But the fact that UK households are paying off debt at a record rate must surely count, says Merryn Somerset Webb.

Queue outside Ikea © Michael Regan/Getty Images
Ikea re-opens: flatpacks have never looked so tempting © Getty
(Image credit: Queue outside Ikea © Michael Regan/Getty Images)

You have to dig around a bit for good news at the moment – it isn’t in fashion. But here is some: in April, UK households paid off £5bn-worth of credit card debt and £2.4bn of personal loans (this week's magazine has some help on how to do this yourself). That’s the most on record. At the same time UK savings rates are on the rise: according to money management app Yolt, their users put 70% more into savings accounts in April than in February. They also put 63% more into various investments. Thanks to generous furlough schemes, the ability to take mortgage holidays (and so to focus on chipping away at higher-interest debt) and, of course, the full cancellation of many of our usual routes to overspending, we are saving more than we have in a long time – £16.2bn in April compared to around £5bn in a normal month.

You will say this is temporary. You could be right. As soon as lockdown ends and the real tally of lost jobs begins to show, a large number of people will lose their ability to save very quickly. And many of those who have been forced into retrenching over the last few months but who also hang on to their incomes post-lockdown will return to their old habits sharpish (note the three-hour queue outside Ikea at the weekend).

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.