Household debt to grow nearly three times faster than wages under Osborne’s plans

By 2019 total UK household debt will be 182 per cent of household income

George Osborne’s economic plans depend on household debt growing three times faster than pay over the course of the next parliament, according to new analysis.

While wages are forecast to grow at 16 per cent, total household debt is forecast to grow 2.7 times as fast at 42 per cent, according to the TUC.

Unsecured household debt is also forecast to grow 4.5 times as fast as wages – by 70 per cent between 2015 and 2019, with average unsecured debt of around £29,000 per household by 2019.

The analysis used forecasts by the Office for Budget Responsibility (OBR) to compare earnings and household borrowing for the period. Secured debt refers mainly to mortgages while unsecured debt is largely consumer credit and overdrafts from banks and other lenders. Total household debt includes both secured and unsecured debt.

If the forecasts are borne out, by 2019 total UK household debt will be 182 per cent of household income, much higher than the previous high of 167 per cent immediately prior to the 2008 crash.

Commenting on the figures, TUC general secretary Frances O’Grady said:

“The chancellor seems to be hoping for a do-it-yourself recovery, where families run their own deficits and stoke-up their own debt. An average household debt of £29,000 is an awful lot of payday loans, credit card debts and bank overdrafts.

“This is exactly what happened before the last crash, and why we had to bail out banks full of bad debt. If interest rates rise, then many households will be in immediate difficulty.

“In a healthy economy, workers’ wages grow faster than their debts . What we really need is a wages-led recovery, not a debt-fuelled bubble. If this chancellor continues he will be doing the exact opposite of what we need – his huge cuts to vital services will slow the economy while he encourages families to spend money they don’t have instead. It’s not so much a long-term plan as a dodgy flat-pack self-assembly recovery.”

Forecast for UK wages and household debt from 2015 to 2019


(Q1 2007 = 100)

Total household debt

(£ billions)

Secured debt

(£ billions)

Unsecured debt

(£ billions)
















Source: ONS

The average unsecured debt per household is based on the Office for National Statistics (ONS) figure of 26.7 million UK households in 2014.

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