A new report by the Trades Union Congress (TUC) has revealed that household debt rose sharply over 2016, with total unsecured debt (that is, debt other than mortgages) reaching a record level of £349 billion during the third quarter of the year.
The TUC’s analysis, which is based on figures from the Office for National Statistics (ONS), also found that:
- unsecured debt per household rose to £12,887 in the third quarter of 2016, which is up £1,117 on a year earlier – representing the highest annual increase since at least 1997
- unsecured debt as a share of household income now stands at 27.4% – the highest for eight years.
The TUC claims that weak wage growth has meant that more families are reliant on borrowing to support their living standards. 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.’
However, Bank of England officials have indicated that they are not unduly concerned about current debt levels. Andy Haldane, the Bank’s chief economist, said: ‘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.
‘There are reasons not to be too alarmed about it ticking up, but it is absolutely something we will watch carefully.’