Ticon UK Ltd

According to the OECD, British consumers are the most indebted in the G7 - between 1997 and 2007, our consumer debt rose by 78.5% to 185.7% of our disposable incomes. Our nearest rivals in this ignominious chart of indebtedness are the Americans with a mere 141%, whilst the French and the Germans are dawdling with around the 100% mark. This means that it will take an average UK consumer 22 months to pay off their debts, assuming they commit nothing to housing, food or clothes.

With banks closing out credit lines and unemployment rising, businesses are already trying to estimate how vulnerable they are from falling consumer spending, but do Councils understand what could happen to their income streams? Paying Council tax is a legal requirement which provides Councils with a protection against waning consumer spend, but Councils are vulnerable to defaults and bankruptcies, not only because this will affect their income streams but because they also have to help pick up the pieces when families go bankrupt.

What can a Council do to protect against a potential wave of consumer defaults? Firstly, Councils should calculate their consumer leverage ratios. This means getting a handle on what changes in household finances will do to income streams and the likely knock-on effect on service needs. By calculating leverage ratios, Councils can model out how rising unemployment and closing credit lines will really affect their business.

Ticon can work with Councils to establish how much of their income is provided through credit cards and what rising defaults will do to incomes. Coupling this with advanced data on bankruptcies means that we can help Councils to identify what additional funds will be needed to cover their exposure to consumer debt.

We think that Councils will find that they are significantly more exposed than they think.