Households have reached a “breaking point” with household debt expected to rise by more than £1,600 this year, according to a new report.
Household debt is on track to rise by 9.4% in real terms, on average, per household, making it the largest annual increase – in monetary terms – since debt records began in 1987.
Unsecured household debt includes things like loans and credit cards but does not include mortgages and student loans.
It is set to rise by more than £1,600 this year as households continue to suffer the cost of living crisis, TUC analysis found.
The union body said its research indicates that two out of five people have reduced their basic expenses such as food and utilities this year.
A fifth of respondents to a survey of 2,100 people said they had defaulted on household bills this year, and more than one in four had taken out loans to cover unexpected bills since the beginning of the year.
The union body said its research indicates that two out of five people have reduced their basic expenses such as food and utilities this year
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Paul Nowak, general secretary of the TUC, said: “These results show how out of touch this Conservative government is with people’s struggles.
“While the Conservatives boast about the success of their plan, households across Britain are falling into more debt.
“No one should rely on credit cards and loans to make ends meet, but after 14 years of flat wages – and the worst cost-of-living crisis in generations – many families are on the verge of collapse.
“The Tories’ economic record speaks for itself. The value of today’s pay packages remains lower than they were in 2008, with Labor on track to end this Parliament poorer than they started.
The TUC says workers have been brutalized by rising costs and household debt after years of stagnant wages.
UK workers are on course for nearly two decades of losing living standards, and real wages are not expected to recover to their 2008 levels until 2026.
The TUC estimates that the average worker would now be £14,700 better off if their wages kept pace with pre-crisis real wage growth trends since 2008.
Six in 10 say they have cut back on non-essential spending such as eating out and entertainment since the start of the year.
About 19 percent of respondents say they have fallen behind on household bills this year – the proportion jumped to 28 percent for people aged 18 to 24.
And 27 percent say they have taken out debt (loans and credit) to cover unexpected bills since the beginning of the year. But it rises to more than a third in adults aged 25 to 49 years.
The latest developments:
By 2026, unsecured household debt is expected to rise to a record £17,200.
This would exceed the previous record of £16,800 set in 2007, the TUC said in research conducted at the end of 2023.