The tight financial conditions faced by Brits were highlighted again this week with reports on how cash-strapped young people are using payday loans and impoverished relatives are burying their loved ones at home.
One in eight young people say they have borrowed money from lending firms, according to a new report released Thursday by the U.K. children's charity Action for Children. The report interviewed 1,058 people in focus groups between the ages of 12 and 18 and found that 41 percent of those that had borrowed had done so with payday loan providers.
The charity also found that store cards are also be used more and more, with over a third of the young people saying they had used them. Its anecdotal evidence suggested that young people were using the debt to replace household goods, set up their first home or to keep up with their friends.
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"Baffling financial jargon and a lack of knowledge will dramatically create a vicious circle of debt, increasing the risk of mental health problems and unemployment," said Tony Hawkhead, the chief executive of Action for Children, in Thursday's report.
Payday loan companies have been heavily criticized by policymakers in the U.K. for the four-figure interest rates they tie to cash advances. Regulators have moved to introduce new rules to cap charges and these firms have made changes to their lending criteria in response.
The companies stress they have strict rules on who can receive loans, with the minimum age being 18 years. However the breakdown within Thursday's study shows that minors are receiving these loans with 46 percent of the 12-year-old respondents saying they had borrowed money from a payday lender.