Coping Classes aim to reduce debt
The move is fuelled by the fear that over half of people (52%) unemployed in the UK have been so for over six months, according to a report by Friends Life entitled ‘The Coping Classes’ and part of Friends Life’s Vision of Britain 2020 series.
The report states that over half (59%) of middle income households would be unable to provide for themselves and their families for longer than six months if they lost their main source of income.
According to the report, the recent recession has radically altered attitudes towards debt for a generation. The group, who make up one in five working age adults in the UK, are committed to shopping around and reducing their borrowings as part of a series of coping mechanisms to help them survive the ongoing effect of the downturn.
The Coping Classes are middle income earners (£25-50k) who have been impacted by the recession and feel disproportionately affected by public sector spending cuts, as part of the government’s deficit reduction plans.
With their finances under attack from rising inflation, an expected hike in interest rates and a fragile housing market, the Coping Classes are embracing a new set of behaviours to halt further erosion of their income, including a radical change in attitude towards debt. 84% of them say they are committed to avoiding taking on any more debt in the next six months and nearly three-quarters say they are putting plans in place to pay off most of their debt within ten years.
Commenting on the findings, David Hynam, executive director, operations, at Friends Life, said: “Five years ago the Coping Classes were comfortably off, but the recession and the effects of public spending cuts seemingly tilted against them has changed their status.
“We’re now seeing them take clear, decisive and urgent steps to address this, in the knowledge that state support and assistance in many areas is unlikely to return.
“Most striking is the new attitude towards debt. We’re witnessing a slow march down the debt mountain, which will have huge implications for financial planning and for the financial services industry.”