New analysis shows that unsecured debt is projected to surge over
the next five years, escalating from 29.1% of disposable income
in 2022 to a notable 38.6% by 2028.
Unsecured debt, used by millions of people in Britain,
encompasses various financial obligations such as car finance,
credit cards, and overdrafts and also serves as an important
economic indicator of consumer confidence and financial health of
the broader economy.
The rise in family debt, buried in the Office of Budget
Responsibility’s (OBR) November outlook amounts to an increase
worth £154 billion or £5445 per household.
This forecast will put additional strain on already tight
personal finances during the cost of living crisis, further
limiting disposable income available for essential living
expenses, savings, discretionary spending and can lead to
limitations on accessing credit for some people.
Last month Prime Minister erroneously claimed that
national debt was falling, despite surpassing £2 trillion for the
first time ever and last week new research from the New Economic
Foundation (NEF) demonstrated the scale of decline in disposable
incomes and failure to address regional inequality under the
Conservatives since 2019, with the average household in the
Midlands, Yorkshire, North West and South West having their
income drop by over £500.
, Labour’s Shadow Chief
Secretary to the Treasury, responding to the new
analysis, said:
“When people are spending more of their income to service debt,
it damages their quality of life, limits their potential and
takes more money out of our local economies.
“Rishi Sunak promised to cut debt, but the national debt has hit
record levels, surpassing £2 trillion for the first time
ever.
“Under the last Labour Government disposable income rose by more
than 40%, or £11,000 per person and Labour has a plan to keep
more money in working families’ pockets.
“Labour will introduce iron-clad fiscal rules to oversee
effective public spending and ensure that the Office of Budget
Responsibility is empowered. We will drive down the cost of
living for good by getting Britian building again to generate
growth in the economy and create good jobs across the
country.”
Ends.
Notes
- Unsecured debt as a proportion of disposable income is
published by the OBR, in Economy Supplementary Table 1.11b:
https://obr.uk/efo/economic-and-fiscal-outlook-november-2023/
- Unsecured debt is set to rise from 29.1% of disposable income
in 2022 to 38.6% in 2028.
- That is an increase worth £154bn, of £5,445 per UK household.
Using 2022 prices.
- Disposable income forecast is published by the OBR, in
Economy Supplementary Table 1.11
- High levels of consumer debt is also a closely-watched factor
that influences the Bank of England’s monetary policy
decisions.
