Households are facing a “debt timebomb” next year, according to analysis from a trade unions group.
The Trades Union Congress – which includes the likes of GMB, Unite and Unison – predict unsecured debts are set to surge by £1,400 in 2024.
This includes borrowing which does not have property as collateral, such as loans, credit cards and purchase hire agreements, but not mortgages. The TUC also excluded student loans from its forecast.
Tax cuts, a new PM and a Nigel Farage comeback – what 2024 could have in store
According to the TUC, unsecured debt per household is set to go from £13,361 in 2023 to £14,792 next year – a rise of roughly 11%.
By 2026 this figure could be £17,719, according to the group’s forecast – the previous high was £16,800 set in 2007.
They calculate their figures using a mix of Office for National Statistics data for existing figures, and Office for Budget Responsibility predictions for the future.
The TUC says “working people” have been left “brutally exposed to the cost-of-living crisis” – adding that “if something doesn’t change”, then real wages won’t recover to pre-2008 levels until 2028.
By this point, unsecured debt per household could be as high as £19,117.
If wage growth had kept up with pre-financial crisis levels, the average worker would be £14,800 better off, according to the TUC.
The union group’s general secretary, Paul Nowak, is set to warn the UK “cannot afford the Tories” in his annual address for 2024 – when an election will be called.
The TUC claims the government’s cutting of national insurance will be “more than wiped out” by a lack of growth in living standards alongside the rising debt.
Meanwhile, Torsten Bell, the head of the Resolution Foundation think tank, has warned that next year will be “messy”.
He notes that despite inflation falling faster than expected, higher interest rates mean around 1.5 million mortgage holders will have to cough up an extra £1,800 a year.
Renters will also see prices go up – with only “outright owners” of their homes seeing “strong living standards growth”.
The national insurance cut – coming on 6 January – “won’t last”, Mr Bell adds – as the raising of tax thresholds in April has been cancelled.
Mr Bell said: “The net effect will be a tax cut for the top half of earners, and tax rises (or no change) for the bottom half.”
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Mr Nowak will say: “Every month the Tories stay in office the more families will be pushed into debt.
“This party of out-of-touch millionaires is more focused on clinging to power than on growing our economy and getting living standards rising again.
“If something doesn’t change, real wages won’t recover to their 2008 levels until 2028.
“These 13 years of economic stagnation have left working people brutally exposed to the cost-of-living crisis.”