‘Broken economy’ is driving record levels of household debt, TUC warns

Lower salaries, insecure employment and austerity are fuelling a growing debt crisis, the Trades Union Congress (TUC) has warned.

Unsecured debt per household has risen to £15,880 in the first quarter of 2019, up £1,160 when compared to Q1 2018, data published by the TUC revealed.

Furthermore, over half of households reported having unsecured debt, most commonly in the form of credit card debt (60 per cent), overdrafts (28 per cent), personal loans (25 per cent) and car finance (25 per cent).

The figures suggested that younger people are “disproportionately” likely to be in debt, with 70 per cent of 18 to 34-year-olds claiming to have a type of unsecured debt. When assessing those over the age of 65, this figure drops to just 33 per cent.

Commenting on the data, TUC general secretary Frances O’Grady said: “Our broken economy is forcing working families deep into debt.

“Low pay, insecure work and austerity have pushed millions of households to the financial cliff edge. Big corporations are raking in huge profits at working people’s expense. And successive governments have done nothing to avert the crisis.”

The TUC stated that persistent low pay is the key driver of household debt, as real wages are still lower than they were before 2008’s financial crisis. This has resulted in working families struggling to make ends meet without going into the ‘red’.

The data also found that of those with unsecured debt, one in five said repayments were a “heavy burden on their finances” and one in seven admitted to falling more than two months behind on repayments in the last year. Almost half (45 per cent) do not feel as though they have enough money set aside for emergencies.

O’Grady noted that now is the time to “reset the balance of power in our workplaces and our economy”, adding: “Government must make more employers negotiate pay and conditions with unions. That will lift wages for everyone and stop working families having to rely on credit cards and overdrafts to get through the month.”

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