Scots paying off debts at a higher rate than any other part of the UK

SCOTS are paying off their debts at a higher rate than any other part of the UK, but the country as a whole is fearful that credit is becoming increasingly hard to come by, a new report revealed.

More than one in four Scots (28 per cent) have lower levels of debt than this time last year – a figure that has grown rapidly in the past three months.

But the research also shows there is deep unease about the availability of credit over the next 12 months, with two-thirds of people worrying that access to cash will dry up at a time when household incomes are struggling to keep pace with escalating inflation.

A regional breakdown of the statistics revealed that Glaswegians have been paying off debts at a higher rate than Scotland as a whole, with 32 per cent reporting being less in debt now than a year ago – an increase of ten percentage points from July.

In Edinburgh, 19 per cent are less in debt than a year ago, a figure beating other capital cities in the UK – with London showing 15 per cent and Cardiff 4 per cent.

The figures are part of the latest Credit Confidential Credit Index, undertaken with the Centre for Economics and Business Research, whose findings showed that debt levels across every region of the UK are falling for the first time this year, at an average rate of 10 per cent.

The south-west of England showed the lowest figures with 3 per cent compared to the much higher levels in Scotland.

The figures follow the announcement by the British Bankers’ Association last month that in August UK consumers had paid back £100 million more in credit cards and personal debt than they had borrowed in July.

Economist Jonathan Davis said that a possible reason for Scots paying backing more debt was that the economy had a heavy reliance on public-sector employment.

“Instead of actually paying off debt, what I suspect is that the lenders are lending less because there’s more risk of loss from the Scots, because a higher proportion of the economy is public sector and when that gets hammered, so does Scotland,” he said.

“There’s no way on earth that it is because Scots are actively paying down debt because nobody has any money, what with the rising cost of living without similar pay rises, rising unemployment, falling full-time employment.”

The report also showed that fears among consumers about the drying-up of credit have risen since mid-summer, with 67 per cent of people believing that it will be increasingly hard to get credit, up from 62 per cent in July.

A spokesman for Citizens Advice Scotland voiced caution about taking the figures on face value, stating that debt remained a “massive problem” for Scotland.

“The availability of credit is a major concern, and again it is those on the lowest incomes who are most likely to be penalised,” he said.

“For those who are struggling day by day on the poverty line, credit is a fact of life. You have to borrow sometimes – not for luxuries, but just to put food on the table. People need access to affordable credit, and if low-cost credit options are not available they will have no choice but to turn to loan sharks and high-rate lenders.

“Overall, debt remains a massive problem in Scotland.”