ShareBack to blog
Britain could be facing a household debt crisis that one organisation sees no way out of, should government regulation and action not change to match this new hurdle. According to new research conducted by the Trades Union Congress (TUC), unsecured debt reaching a new high, resulting in a higher debt-to-household ratio than the highs registered during the so-called “credit crunch”.
In its figures, the TUC discovered that total unsecured debt – which includes both consumer credit and student loans, but does not take mortgages into account – jumped to £319 billion in quarter three of 2015, putting it well ahead of the £290 billion peak of the financial crisis in 2008. Furthermore, this unsecured debt as a share of household income now stands at 26.5% – the highest figure for five years.
Most jarringly is the fact that unsecured debt per household is now £11,800, rising by an average of £600 on the previous year: the highest this has ever been.
The TUC said that while Christmas has come and gone, there is a much bigger issue in the average Briton’s midst, and cited the findings from the Office for Budgetary Responsibility which claimed that UK household spending would be in a deficit of £40 billion for 2015 as a whole; the Treasury Select Committee had also been warned that consumer credit would be “picking up at a rate of knots” over 2016 and beyond.
“Rising household debt signals that too many people are still struggling to make ends meet,” said Frances O’Grady, TUC general secretary. “With pay growth slowing, and households facing a lost decade on wages, it’s no surprise that more families are relying on borrowing to meet the costs of day-to-day essentials.”
She highlighted that while employment has risen, the real value of wages was not in line with inflation, meaning that meeting the true cost of living was more difficult than it was eight years ago.
Ms O’Grady concluded: “The government must do more to increase job security, with the hours and pay that people need to get by. Otherwise we’ll be heading back to the same problems that led to the last financial crash. Ministers should lead by example and bring an end to years of real-terms public sector pay cuts.”
The TUC’s calls follow findings from the turn of the year, when it underlined how British workers who commuted via train could now be spending up to six times as much of their salaries on fares as their European counterparts using publicly-owned railways, following the announcement that ticket costs would once again rise from January 1st.
- Author bambooloans
- Posted 21 January 2016