New data from the Office for National Statistics (ONS) shows that the average UK household now owes a record amount of £12,887, without mortgages even being taken into consideration.
The ONS found that the UK’s total unsecured debt hit an all-time high of £349 billion in September 2016, the latest period for which data is available.
This figure takes into consideration the growing issue with Student Debt, but even with this removed the Bank of England put the total at £192 billion in November 2016 – the highest amount since December 2008.
“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 of England’s chief economist.
“There are reasons not to be too alarmed about it ticking up, but it is absolutely something we will watch carefully.”
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 this year, this borrowing could become more difficult to repay – and some households risk finding themselves exposed to sudden changes in financial circumstances.”
In response to the data, the TUC said that the figures showed that unsecured debt as a percentage of household income had now reached 27.4 per cent – the highest figure for the last eight years. It believes wage stagnation has led many households to become reliant on borrowing to get by.
“These increases in household debt are a warning that families are struggling to get by on their pay alone,” said Frances O’Grady, the TUC’s general secretary.
“Unless the government does more for working people, they could end the New Year poorer than they start it.”