09 January 2017
An increasing number of families are being forced to take out loans to cover the costs of their day-to-day living, new research shows.
Unsecured household debt has reached a record high of £349 billion, according to research by the TUC.
Consumer credit - excluding mortgages - is at 27.4% of overall household income and the union organisation says these figures highlight "fundamental problems" with the economy, blaming weak pay growth and low public investment for the sharp rise.
General secretary Frances O'Grady said: "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 TUC chief says the increases in household debt are a "warning" that families are struggling to get by on their pay alone.
She added: "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."
Responding to the figures, Joanna Elson, chief executive of the Money Advice Trust, 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."
This article was written by the Press Association, for Legal & General. Please note the views expressed in this article are not necessarily the views of Legal & General and its group of companies.
Copyright Press Association 2017