25 May 2017
- Unsecured debt per household will pass pre-crisis peak this year, and exceed £15,000 by 2020
- Low wage, low investment model is pushing the economy into the danger zone, says TUC
- Next government must deliver plan to address living standards crisis
The TUC is today (Thursday) publishing new analysis of household debt, which finds that unsecured debt per household will reach a record high of £13,900 this year.
Unsecured debt per household was £13,200 in 2016 – the highest figure since the financial crisis, and only marginally below the peak of £13,300 in 2007.
The TUC analysis also finds that unsecured debt per household is set to exceed £15,000 before the end of the next parliament (all figures are in 2016 prices).
The rise in household debt reflects the UK’s ongoing living standards crisis, says the TUC. Wages in the UK are still worth around £20 per week less than before the financial crisis a decade ago. And official figures from the ONS show that real wages are now falling again.
The TUC believes the growth in household debt should concern all the political parties. The next government will inherit an economy that is heavily reliant on household spending to maintain growth, but in which debt per household is higher than before the financial crisis.
County Court debt judgments against consumers have risen 35% in England and Wales, and the Bank of England is investigating concerns about unsecured lending to households.
TUC General Secretary Frances O’Grady said: “The surge in household debt is putting the economy in the danger zone.
“We’ve got this problem because wages haven’t recovered. Credit cards and payday loans are helping to prop up household spending for now, but millions of families are running on empty.
“The next government must act urgently to deliver the higher wages Britain needs for sustainable growth. They must boost the minimum wage, and end pay restrictions for public servants like nurses, firefighters and midwives.
“A lot more government support is needed for the parts of Britain where well-paid jobs are in short supply. Communities that lack good jobs today could thrive tomorrow if they get proper investment in training, transport links, broadband and decent housing.”
ENDS
Notes to Editors:
- TUC analysis:
Unsecured debt per UK household
Year |
Debt per household |
|
Outturn |
Projected |
|
1999 |
£8,500 |
- |
2007 |
£13,300 |
- |
2008 |
£13,300 |
- |
2009 |
£12,500 |
- |
2010 |
£11,900 |
- |
2011 |
£11,500 |
- |
2012 |
£11,100 |
- |
2013 |
£10,900 |
- |
2014 |
£11,300 |
- |
2015 |
£11,900 |
- |
2016 |
£13,200 |
- |
2017 |
- |
£13,900 |
2018 |
- |
£14,300 |
2019 |
- |
£14,700 |
2020 |
- |
£15,000 |
2021 |
- |
£15,400 |
Source: ONS; OBR
- Bank of England concern about household debt: In its May Inflation Report the Bank of England announced a review into consumer credit, saying: “The Prudential Regulation Authority (PRA) has launched a review into the credit quality of new consumer lending by a cross‑section of PRA‑regulated lenders, and the Financial Conduct Authority has launched a review into its rules and guidance on creditworthiness assessments used in the consumer credit market.”
- Registry Trust report: The Registry Trust’s Public Statistics Report for Mach 2017 states that, in Q1 2017, there were 298,901 debt judgments registered against consumers in England and Wales. This is a 35% increase on the same period last year, and it is the highest figure for a single quarter in over a decade. The full report is here: www.registry-trust.org.uk/publications/category/42-statistics
- Wages since the financial crisis: ONS data from the Labour Force Survey shows that the average weekly wage was worth £20 less in 2016 than it was at the peak value of wages before the financial crisis in 2007. The latest ONS labour market data suggests that wages are declining by 0.2% annually. And Bank of England forecasts indicate that real wages will decline by 0.8% in 2017.
- Millions of working families in poverty: ONS data from Households Below Average Incomes 2014/15 indicates that there were 3.1 million working adults below the relative poverty line before housing costs in 2014/15 (the most recent year for which data is available). The ONS publication is here: www.gov.uk/government/uploads/system/uploads/attachment_data/file/532416/households-below-average-income-1994-1995-2014-2015.pdf
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