Credit, Collections & Insolvency News
Research by the Trades Union Congress (TUC) has warned that households face a ‘debt timebomb’ with analysis showing that borrowing is set to increase by £1,400 on average in 2024.
The TUC analysis shows that unsecured debt – which includes personal loans, credit cards, and overdrafts – is set to rise from £13,361 to £14,792 per household in real terms – marking an increase of 11%. By 2026, it is forecast to increase to a record level of £17,200, exceeding the previous high of £16,800 set in 2007.
By 2028 unsecured debt per household is set to top £19,000. Unsecured debt includes credit cards, loans and purchase hire agreements, and excludes mortgages.
The TUC says working people have been left brutally exposed to rising costs after years of pay stagnation adding that the average worker would now be £14,800 better off if pay had kept up with real wage growth trends since 2008
Over the course of the next parliament unsecured debt is set to rocket by £6,000 (+43%), on average, per family.
UK workers are on course for two decades of lost living standards with real wages not forecast to recover to their 2008 level until 2028.
The union body says the sharp spike in debt, along with stagnant living standards, will “more than wipe out” any gains from the Chancellor’s cut to national insurance tax and leave many families “under the cosh”.
The Office for Budget Responsibility says the period between 2021 and 2024 will be the worst for living standards (real household disposable income per person) since records began in 1955.
TUC General Secretary Paul Nowak will warn that Britain “cannot afford the Tories” in his annual New Year Message. Calling for an early general election, Nowak said
“Every month the Tories stay in office the more families will be pushed into debt.
“This party of out-of-touch millionaires is more focussed on clinging to power than on growing our economy and getting living standards rising again.
“If something doesn’t change, real wages won’t recover to their 2008 levels until 2028. These 13 years of economic stagnation have left working people brutally exposed to the cost of living crisis. We cannot afford a Tory government for one day longer.”
Highlighting the choice on offer at the next election, Nowak said “After years of national decline, Labour’s New Deal for Working People would be a gamechanger. It would be the biggest expansion of workplace rights in a generation.
“No more zero-hours contracts and no more fire and rehire. Employment rights from day one. Union rights to access the workplace. New fair pay agreements. Repealing the attacks on the right to strike.
“And more than that, the prospect of a new era of a grown-up, constructive approach to industrial relations, where disputes are solved through negotiation. And a clear commitment to put unions and employers at the heart of a modern-day industrial strategy.”
