Household debt increased by a third in 2021

New analysis by Jubilee Debt Campaign has found that the number of households struggling with a heavy debt burden has increased by a third in 2021.

According to the analysis of the Bank of England’s household survey, the percentage of households reporting that loan and interest payments were a heavy financial burden increased by 35% from 7.19% to 9.68%. This suggests an extra 1.3 million adults fell into financial hardship in 2021.

Households also reported that their average monthly loan repayments hit a record £373 in 2021, up 22% on the year before and the highest figure for at least a decade. 

The survey was conducted before Universal Credit was cut by £20 in October last year, the Omicron wave and the recent surge in the cost of living. Real wages and benefits, after inflation is taken into account, are currently declining in the UK and millions of low-income households are being forced to borrow or go without essentials such as food and heating.

Joe Cox, Senior Policy Officer at Jubilee Debt Campaign, said “The problem of household indebtedness is growing at an alarming rate. Millions of UK households never recovered economically from the pandemic and the latest cost of living scandal threatens to push people who are already living on the edge further into debt and poverty.”

“Ignoring this problem won’t make it go away. Instead, we need urgent action to alleviate the crushing pressures on British households by writing-down large amounts of problem debt and widening access to insolvency solutions.”