UK debt mountain hits £428 billion record

Britain’s unsecured debt mountain has reached a new record of £428 billion, according to research done by the TUC.

The investigation showed that non-mortgage debt rose by an average of £886 per household to £15,385.

Highest ever

The TUC arrived at its figure by adding up all forms of unsecured lending including credit cards, store cards, overdrafts, personal loans, payday loans and student loans.

The total comes to an average of 30.4% of household income – the highest it has ever been.

The TUC claims millions of households are now reliant on borrowing to get by as the average working family is worse off than a decade ago. The total level of debt is now 50% higher than the debt mountain which preceded the 2008 financial crisis.

Crisis level

General secretary Frances O’Grady said: “Household debt is at crisis level. Years of austerity and wage stagnation has pushed millions of families deep into the red.

“The government is skating on thin ice by relying on household debt to drive growth. Our economy is not working for workers.

They need stronger rights and bargaining powers. A strong economy needs people spending wages, not credit cards and loans.”

According to the Bank Of England, consumer credit growth has been slowing since 2016, but is still expanding.

Factors

The research names public spending cuts, years of wage stagnation, the rise of the ‘gig economy’ and zero hours contracts as the major factors for ‘pushing millions of families deep into the red.’

Ms O’Grady says the £7.83 minimum wage for over 25s remains too low and should be raised to £10 an hour ‘as soon as possible’.

She also called for trade unions to be given the freedom to enter all workplaces to organise collective wage bargaining because too few workers currently have the power to bargain for higher wages.

Losing battle

Personal finance specialist Becky O’Connor said: “Paying off debt of this size can feel like a losing battle when there is no hope of an income rise on the horizon.

It will be scant comfort that millions of other households are in the same boat.

“But there are actions people can take to reduce the burden. Those in real difficulty should seek specialist help from a free debt charity, such as StepChange.”