Household debt in UK 'worse than at any time on record'. British household finances among most indebted in major western countries.
British households spent around £900 more on average than they received in income during 2017. The Office for National Statistics said the shortfall amounted to nearly £25bn – equal to almost a quarter of the NHS budget – and the overspend was mostly paid for with borrowed money, though households also ran down savings.
Analysts warned that a squeeze on household incomes from benefit cuts, lackluster wages and high inflation would continue to force poorer households to borrow more to pay basic bills. The ONS said households took out nearly £80bn in loans in 2017, the most in a decade. But they deposited just £37bn with UK banks, the least since 2011.
Last year official data showed unsecured credit – such as credit cards and payday loans – climbed to a record high of more than £205bn while the consultancy PwC said its own measure showed consumer debts rising above £300bn.
British households spent around £900 more on average than they received in income during 2017. The Office for National Statistics said the shortfall amounted to nearly £25bn – equal to almost a quarter of the NHS budget – and the overspend was mostly paid for with borrowed money, though households also ran down savings.
Analysts warned that a squeeze on household incomes from benefit cuts, lackluster wages and high inflation would continue to force poorer households to borrow more to pay basic bills. The ONS said households took out nearly £80bn in loans in 2017, the most in a decade. But they deposited just £37bn with UK banks, the least since 2011.
Last year official data showed unsecured credit – such as credit cards and payday loans – climbed to a record high of more than £205bn while the consultancy PwC said its own measure showed consumer debts rising above £300bn.
StepChange, which provides advice for indebted households, said the poorest were in constant need of credit to keep their heads above water.
The charity’s chief executive, Phil Andrew, criticised the ONS for saying that households were living beyond their means, which he said implied they could cut back if they wanted to.
“It’s really unfortunate that this very useful data is so heavily sprinkled with the phrase that households are ‘living beyond their means’. The reality is that too many households, here in Britain, in 2018, simply cannot make ends meet, however hard they try.” He added: “Not having enough money to make ends meet is not the same thing as living beyond your means – which implies you have a choice, when too many people do not.”
Tom Selby, a research analyst at financial adviser AJ Bell, said “For people having to borrow to make ends meet, saving for the future might feel like a luxury they simply cannot afford.”
According to ONS figures, the poorest 10% of households spent two and a half times their disposable income, on average, in the financial year ending 2017 – while the richest 10% spent less than half of their available income during the same period.
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