Unsecured debt has hit a new peak of £15,400 per household according to new analysis by the Trade Union Congress (TUC) with a further threat of families being pushed further into the red, Debt levels are now higher than before financial crash.
The new analysis by the TUC shows that household debt rose sharply over 2018, with unsecured debt (debt other than mortgages) reaching new highs:
Unsecured debt per household rose to £15,385 in the third quarter of 2018, which is up £886 on a year earlier. Total unsecured debt rose to £428bn in the third quarter of 2018 – a record high, and well above the £286bn peak in 2008 ahead of the financial crisis, Unsecured debt as a share of household income is now 30.4% – the highest it’s ever been, and above the level it reached in 2008 ahead of the financial crisis (27.5%). The TUC says government austerity and years of wage stagnation are key reasons behind the increase in unsecured debt.
Working families on average worse off today than before the financial crisis. This means millions of households are reliant on borrowing to get by.
TUC General Secretary Frances O’Grady said “Household debt is at crisis level. Years of austerity and wage stagnation has pushed millions of families deep into the red.”
“The government is skating on thin ice by relying on household debt to drive growth. A strong economy needs people spending wages, not credit cards and loans.”
“Our economy is not working for workers. They need stronger rights and bargaining powers. Trade unions should be allowed the freedom to enter every workplace to negotiate higher wages.”
The TUC says that the main reasons for weak wage growth are:
- The minimum wage is too low It should be raised to £10 as quickly as possible.
- The government prioritised corporate tax cuts over public sector pay. Most public sector workers have seen the real value of their pay cut every year since 2010 – they must get restorative pay increases.
- Workers have too little power to bargain for higher wages. Trade unions must be given the freedom to enter all workplaces and organise collective wage bargaining; and insecure workers must have stronger rights.
- UK investment is too low The UK must increase public investment to at least the OECD average, and establish a National Investment Bank with a remit to target communities most in need of better-paid work.