Household debt hits record high, above pre-crisis levels, top union warns

The government is on thin ice if it expects household debt to help drive growth, a top trade union has warned, as data shows that Brits are more in debt than ever.

Unsecured debt reached £15,385 per household in the third quarter of 2018, a 38 per cent increase since the before the financial crisis in 2008, figures from the Trade Union Congress show.

The number also represents a rise of 40 per cent since 2014 when debt started rising steeply again following the downturn.

Loans now account for over 30 per cent of household incomes for the first time ever.

“Household debt is at crisis level. Years of austerity and wage stagnation has pushed millions of families deep into the red,” TUC general secretary Frances O’Grady said.

“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.” 

O’Grady asked the government to jack up the minimum wage to £10 and increase pay for public sector workers.

The union also called for a national investment bank to be established to target communities in need of better-paid work.

“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,” O’Grady said.

Britain’s nearly 28m households held £428bn in unsecured debt in the third quarter of last year, with a debt to income ratio of 30.4 per cent, the TUC said.