Household debt hits levels not seen since 2008, says TUC
The average household in the UK now owes a staggering £12,887 – and that’s before mortgages are taken into account.
The research, carried out by the Trade Union Congress (TUC), based its figures on data obtained from the Office for National Statistics (ONS) for the three months to the end of September 2016.
The TUC divided the total amount of unsecured debt – currently standing at £349 billion – by the number of households in the UK.
It further found that unsecured debt as a percentage of household income reached 27.4 per cent – the highest figure on record for eight years.
It warned that the figures may have inflated since the Government tripled the value of student loans two years ago, from £3000 to £9000 a year.
Excluding student loans, the Bank of England puts debt at a total of £192 billion up until the end of November 2016.
Despite edging towards 2008 figures, it claimed that debt is much less of a problem now than it was then.
“Interest rates are still very low, and are expected to remain so for the foreseeable future, so there are fewer concerns on debt servicing than there were in the past,” said Andy Haldane, the Bank’s chief economist.
“There are reasons not to be too alarmed about it ticking up, but it is absolutely something we will watch carefully.”
Likewise, Joanna Elson, chief executive of the Money Advice Trust, said: “The majority of borrowers will currently be able to cope with this extra debt.
“However, if the economy does indeed suffer in 2017, this borrowing could become more difficult to repay – and some households risk finding themselves exposed to sudden changes in financial circumstances.”