Household debt hits record high on austerity and wage stagnation

Household debt hit a new peak last year as government austerity and wage stagnation took their toll, according to new analysis by the TUC.

Unsecured debt per household rose by £886 from 2017 to £15,385 in the third quarter of 2018, while total unsecured debt rose to a record high of £428bn. This was well above the £286bn peak in 2008 ahead of the financial crisis.

Meanwhile, debt as a share of household income is now 30.4%, at its highest ever and above the 27.5% reached in 2008.

The TUC said millions of households now rely on borrowing to get by, with working families on average worse off today than they were before the financial crisis. It argued that the minimum wage is too low and should be raised to £10 as quickly as possible.

The trade union body said most public sector workers have seen the real value of their pay cut every year since 2010.

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."