New analysis published today (Friday) by the TUC shows that household debt rose sharply over 2019, with unsecured debt (debt other than mortgages) at 31% above its peak before the onset of the financial crisis 2018.
According to TUC analysis, unsecured debt per household rose to £14,540 in the third quarter of 2019, an increase of £430 on the same period the previous year.
Unsecured debt includes bank loans, payday loans, credit cards, store cards, purchase loans and student loans, but excludes mortgages.
TUC warns total unsecured debt rose to £407bn in the third quarter of 2019, the first time it has passed £400bn and well above the £286bn peak in 2008.
Unsecured debt as a share of household income is now back to the same record high of 27.5% that it reached in 2008 at the outset of the financial crisis, says TUC.
TUC claim that some of the main reasons for this a low minimum wage, the rise in insecure jobs such as zero-hours employment, weak wage growth, and a decade of austerity that is discouraging inward investment.
They also blame problems with the roll-out of Universal Credit. In particular, the minimum five-week-wait for causing extreme hardship for claimants.
Government needs urgent plan to raise living standards and help families with dangerous levels of debt, says TUC.
TUC General Secretary Frances O’Grady said: “It’s not about keeping up with the Joneses. This is hard-up families borrowing just to scrape by. It’s for paying the rent, heating the home and feeding the kids.
“The reason we’re seeing this is bad management of the economy.
“Wages are still worth less than a decade ago. Too many people have insecure jobs with uncertain hours. And vital support like working tax credits has been cut.
“No more excuses – the government must put together an urgent plan to improve living standards and to help families struggling with dangerous levels of debt.”