New TUC analysis has shown that unsecured debt per household has risen to record levels. The average household debt rose to £15,880 in the first quarter of 2019, up £1,160 on a year earlier. With over half of households report having unsecured debt, most commonly in the form of credit card debt (60%), overdraft (28%), personal loans (25%) and car finance (25%).
The research also found that young people are disproportionately likely to be in debt. 70% of 18-34 year-olds report having a type of unsecured debt. This drops to 33% among people over 65.
The TUC believes that persistent low pay is the key driver of household debt. Real wages are still lower than they were before the 2008 crisis and working families are struggling to make ends meet without going into the red. The analysis also shows that of those households with unsecured debt: 1 in 5 say repayments are a ‘heavy burden on their finances.’ 1 in 7 (14%) have fallen more than two months behind on repayments in the last year, whilst 45% don’t feel that they have enough money set aside for emergencies.
TUC General Secretary Frances O’Grady said “Our broken economy is forcing working families deep into debt. Low pay, insecure work and austerity have pushed millions of households to the financial cliff edge. Big corporations are raking in huge profits at working people’s expense. And successive governments have done nothing to avert the crisis.”
“It’s time to reset the balance of power in our workplaces and our economy. The Government must make more employers negotiate pay and conditions with unions. That will lift wages for everyone and stop working families having to rely on credit cards and overdrafts to get through the month.”