The latest data published by the Trades Union Congress (TUC) shows that household debt in the UK is now at a record level when one looks at unsecured debt as a share of household income.

On this measure, unsecured debt as a share of household income is now 30.4%, the highest figure on record. The equivalent figure in 2008, as the financial crisis began to bite, was 27.5%.

Unsecured debt per household was £15,385 in the third quarter of 2018, an increase of £886 (around 6%) compared to 12 months earlier. Total unsecured debt rose to £428 billion in the third quarter, when prior to the financial crisis it was considerably lower at £286 billion.

In 1998, average unsecured debt per household was £5,456, and in 2008 it was £11,146.

Essentially all debts except mortgages are included in these figures, which encompass bank loans, payday loans, credit cards, store cards, purchase loans and student loans. Bank of England figures do not include student loans, and hence their reported debt total is only half of that in the TUC analysis.

The true figure may now be even higher, as the TUC analysis was conducted prior to the end of last year, and hence does not include debts accumulated over the Christmas period in 2018. Research by mobile app company Wagestream shows that the average UK worker put £252 of festive spending on credit in 2018, a figure that rises to £352 when we look solely at gig economy and shift workers.

The TUC blamed years of sluggish wage growth for the rise in debt – only in recent months have average wages increased faster than inflation. Adjusted for inflation, wages are still slightly lower than they were in 2008. The organisation also suggested that the rise of the gig economy, and the number of workers on zero-hours contracts, had contributed to the problem.

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 information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article