UK households have seen their debts to credit card firms, banks and other lenders soar by an average total of £886 over the past year alone, according to a new report.
And unsecured debt across Britain has risen by almost 50% since the 2008 economic crash, the analysis by the Trades Union Congress (TUC) has found.
Excluding mortgages, the amounts owed by British households rose to a combined £428bn in the third quarter of 2018 – equivalent to £15,385 per home.
The Times reports that unsecured debt as a share of household income now stands at a record 30.4%.
The total debt figure includes student loans, which were increased from £3,000 to up to £9,250 a year in 2012, but “does not include further debts incurred over Christmas”, adds The Guardian.
The TUC and other analysts are blaming the borrowing boom on the introduction of austerity measures amid stagnant wages.
The problem has “ballooned since people began to loosen the purse strings in 2013 after years of cutting back”, with the annual rate of consumer credit growth peaking at 10.9% in November 2016, says The Times.
“Weak wage growth has fuelled the problem, with families taking on non-mortgage debt as disposable incomes have fallen,” the newspaper continues. “Although wages started picking up last year, a decade of decline has eroded consumers’ buying power.”
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.”
She added: “Our economy is not working for workers. They need stronger rights and bargaining powers.”
The TUC has also called for an increase in minimum wage levels to £10 an hour “as quickly as possible”, reports the BBC. The national living wage for workers aged 25 and over is currently £7.83 an hour, due to rise to £8.21 in April.