Household debt is on course to hit a record high over the next five years with average unsecured debt per household already reaching almost £14,000 this year (2017), according to worrying new analysis by the Trade Union Congress (TUC).
TUC analysis found that unsecured debt per household was £13,200 in 2016 and £13,900 in 2017, and looks set to exceed £15,000 by the end of the next parliament (2023).
This figure includes debts like credit cards, store cards, pay-day loans, bank loans, student loans and car loans.
TUC has warned that low wages and low investment “is pushing the economy into the danger zone” and called on the next UK government to urgently address the growing “crisis” in living standards.
Real-terms wages remain £20 per week less than before the financial crisis that crippled the UK economy nearly a decade ago, despite record employment and fewer people signing on the dole.
The growth in household debt will be a major concern for all political parties, as voters prepare to cast their ballots in the upcoming general election and figures from the Office for National Statistics suggest real-terms wages are falling once again.
County Court debt judgments against consumers have risen 35% in England and Wales, and the Bank of England is investigating concerns about unsecured lending to households.
Commenting on the latest figures, TUC General Secretary Frances O’Grady said: “The surge in household debt is putting the economy in the danger zone.
“We’ve got this problem because wages haven’t recovered. Credit cards and payday loans are helping to prop up household spending for now, but millions of families are running on empty.
“The next government must act urgently to deliver the higher wages Britain needs for sustainable growth.
“They must boost the minimum wage, and end pay restrictions for public servants like nurses, firefighters and midwives.
“A lot more government support is needed for the parts of Britain where well-paid jobs are in short supply.
“Communities that lack good jobs today could thrive tomorrow if they get proper investment in training, transport links, broadband and decent housing.”