Unsecured debt hits new peak of £15,400 per household

According to the new data published today by the TUC, 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 per cent – the highest it’s ever been, and above the level it reached in 2008 ahead of the financial crisis (27.5 per cent).

The TUC said 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.