A new TUC study has shown that unsecured household debt has reached record highs. Debts which do not include mortgages now stands at a collective £349bn for the UK.
Debts now make up an average of 27.4% as a share of household incomes. According to Trade Union Congress (TUC), there are fundamental problems the economy.
In a tweet they wrote, “Weak wage growth and higher inflation will leave more families struggling with debt this year if govt doesn’t help”
They cited lack of government investment and weak wage growth as being at the heart of the problem.
Frances O’Grady, General secretary 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.”
Chief executive of the Money Advice Trust, Joanna Elson said, “This surge in unsecured debt is something that we should all be concerned about, particularly as we are entering uncertain times for the UK economy.
“The majority of borrowers will currently be able to cope with this extra debt. However, if the economy does indeed suffer in 2017, this borrowing could become more difficult to repay, and some households risk finding themselves exposed to sudden changes in financial circumstances.”