Unsecured debt hits new peak of nearly £13,000 per household – new TUC analysis

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Embargoed until: 00.01hrs Sunday 8 January 2017

- Weak wage growth and higher inflation will leave more families struggling with debt this year if government doesn’t help, says TUC

New analysis published today (Sunday) by the TUC shows that household debt rose sharply over 2016, with unsecured debt (debt other than mortgages) reaching new highs.

The TUC says weak wage growth has left more families reliant on borrowing to support their living standards.

The analysis finds that:

  • Unsecured debt per household rose to £12,887 in the third quarter of 2016, which is up £1,117 on a year earlier – the highest annual increase since at least 1997.
  • Total unsecured debt rose to £349bn in the third quarter of 2016 – a record high, and well above the £290bn peak in 2008 ahead of the financial crisis
  • Unsecured debt as a share of household income is now 27.4% – the highest it’s been for eight years.

Today’s findings echo recent Office for Budget Responsibility (OBR) figures showing that households are saving less than ever, and Bank of England data showing consumer credit growing at its fastest rate for 11 years.

The TUC says that the growth of consumer credit should worry the government as a sign that fundamental problems with the economy, such as weak pay growth and low public investment, have not been fixed.

TUC General Secretary Frances O’Grady said: “These increases in household debt are a warning that families are struggling to get by on their pay alone. Unless the government does more for working people, they could end the New Year poorer than they start it.

“Employment may have risen, but wages are still worth less today than nine years ago. The government is relying on debt-fuelled consumer spending to support the economy, with investment and trade in the doldrums since the financial crisis.

“There’s a lot the government could do to help. Public sector workers who have suffered severe cuts to their real pay since 2010 are long overdue a decent pay rise. The minimum wage needs to keep rising so the lowest paid workers can keep up with rising prices. And a major programme of public investment in rail, roads, new homes and clean energy could be targeted at communities where decent jobs are in short supply.”

ENDS

Notes to Editors:
- The TUC analysis is presented below
Comparison of UK household debt data, 2000 to 2016

 

Unsecured borrowing,    £ billion

Disposable income (rolling annual sum), £ billion

Debt to income, percent

Number of households, thousands

Debt per household, £

           

2000 Q3

158

733

21.5

24,396

6,462

2001 Q3

173

775

22.3

24,535

7,048

2002 Q3

200

801

24.9

24,792

8,059

2003 Q3

211

828

25.5

24,917

8,461

2004 Q3

231

858

26.9

24,993

9,238

2005 Q3

250

887

28.2

25,217

9,909

2006 Q3

263

928

28.3

25,379

10,350

2007 Q3

278

970

28.6

25,609

10,847

2008 Q3

290

1,005

28.9

25,875

11,215

2009 Q3

281

1,036

27.1

26,042

10,791

2010 Q3

283

1,072

26.4

26,240

10,769

2011 Q3

283

1,089

26.0

26,409

10,719

2012 Q3

280

1,124

24.9

26,614

10,526

2013 Q3

288

1,155

24.9

26,663

10,789

2014 Q3

300

1,186

25.3

26,734

11,234

2015 Q3

318

1,236

25.8

27,037

11,770

2016 Q3

349

1,275

27.4

27,090

12,887

Source: Office for National Statistics (ONS) and TUC analysis


- The amount of unsecured debt per household is an average taken across all UK households. As some households will not have any unsecured debt, the typical debt of an indebted household will be higher still.
- The Office for Budget Responsibility (OBR) forecast in November that the UK household saving ratio will hit record lows of 4.4% in 2016 and 3.8% in 2017, as increases in household spending continue to outstrip earnings. The OBR also forecast that unsecured borrowing as a share of income will rise year on year, and by 2019 will exceed the pre-crisis peak.
- Bank of England data has shown that households are borrowing more. Figures published on 4 January 2017 show that consumer credit grew by 10.8% in the year to November 2016 – the fastest growth for eleven years.
- All TUC press releases can be found at tuc.org.uk/media
- TUC Press Office on Twitter: @tucnews

Contacts:
Press Office  T: 020 7467 1248  E: media@tuc.org.uk
Tim Nichols  T: 020 7467 1388  M: 07808 761844  E: tnichols@tuc.org.uk
Michael Pidgeon  T: 020 7467 1372  M: 07717 531150  E: mpidgeon@tuc.org.uk
 

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