UK adults will owe average of over £47,000 by 2020 as personal debt crisis looms

The Money Charity is calling on all parties to make financial capability a key policy priority after May's election or face a personal debt crisis, as it reveals that adults in the UK will owe an average of over £47,000 ($70,000) by 2020.

In its Money Statistics report, the charity reveals that outstanding mortgage lending in the UK reached £1.3tn for the first time in February – but this will increase by almost 50% as house prices continue to rise over the next five years.

While the figures also show that average personal debt, including mortgages, is currently £29,126, the Office for Budget Responsibility expects this number to rise 62% with total personal debt reaching £2.495tn by the first quarter of 2020.

Using official population estimates, the Money Charity claims this makes an average of £47,195 per adult — £34,124 of which will be mortgage lending.

Post-electoral challenge

"With total outstanding debt set to reach £2.5tn by the end of the next Parliament, we need to put plans in place to make sure everyone can manage their money – before they get into problem debt," chief executive Michelle Highman said.

To avoid facing a personal debt crisis, Highman is calling on the next government to set up well-resourced financial education in schools, and support for adults throughout their lives as part of a joined-up strategy for improving financial capability.

"It also means products that support people to manage their money, and fair treatment and insolvency options for people who do get into difficulties," she said, adding, "Securing financial education initiatives in schools should be an immediate priority for whoever is in Downing Street on 8 May."

There is currently no state funding for financial education despite its position on the national curriculum.