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Unsecured debt in the UK rises to £349 billion, average household owes £12,887

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Unsecured debt in the UK has increased to a record high of £349 billion, with the average UK household £12,887 in the red, before mortgages are taken into account, according to the Trades Union Congress (TUC).

The data is based on information by the Office for National Statistics (ONS) for the three months to end of September 2016.

Unsecured debt as a percentage of household income rose to 27.4%. The TUC said that consumer credit reveals “fundamental problems” with the British economy.

TUC General Secretary Frances O’Grady said:

“These increases in household debt are a warning that families are struggling to get by on their pay alone. Unless the Government does more for working people, they could end the new year poorer than they start it.

“Employment may have risen, but wages are still worth less today than nine years ago. The Government is relying on debt-fuelled consumer spending to support the economy, with investment and trade in the doldrums since the financial crisis.

“There’s a lot the Government could do to help. Public sector workers who have suffered severe cuts to their real pay since 2010 are long overdue a decent pay rise.

“The minimum wage needs to keep rising so the lowest paid workers can keep up with rising prices, and a major programme of public investment in rail, roads, new homes and clean energy could be targeted at communities where decent jobs are in short supply.”

Unsecured borrowing,

£ billion

Disposable income (rolling annual sum),

£ billion

Debt to income,

percent

Number of households,

thousands

Debt per household,

£

2012 Q3

280

1,124

24.9

26,614

10,526

2013 Q3

288

1,155

24.9

26,663

10,789

2014 Q3

300

1,186

25.3

26,734

11,234

2015 Q3

318

1,236

25.8

27,037

11,770

2016 Q3

349

1,275

27.4

27,090

12,887

Source: Office for National Statistics (ONS) and TUC analysis


As pointed out by Brian Milligan, personal finance reporter for the BBC, the TUC figures are ‘inflated’ as they include student loans, which have ‘increased rapidly’ over the past few years.

According to data by the Bank of England released last week, consumer credit, excluding student loans, rose to £192.2 billion in November 2016.

The central bank’s chief economist Andy Haldane said:

“Interest rates are still very low, and are expected to remain low for the foreseeable future, so there are fewer concerns on debt servicing than there were in the past.”

“There are reasons not to be too alarmed about it ticking up, but it is absolutely something we will watch carefully.”