Debt bombshell as Britons expected to borrow an extra £1,660 this year to fund essentials | Personal Finance | Finance

UK households are expected to rack up extra unsecured debts of £1,660 this year, largely through credit cards and loans, according to new estimates.

The increase comes as millions of people continue to rely on debt to cover essentials, from food to utility bills, to cope with the cost of living squeeze.

The extra debt, which does not include home loans, represents a rise of 9.4 percent. If the figures prove to be correct this would be the largest annual rise in cash terms since records began in 1987.

The figures come from the TUC trade union organisation which said they make clear that the squeeze on British consumers is far from over despite falling inflation.

Separately, new official figures show that a record number of people in England and Wales took out a debt relief order (DRO) – a form of insolvency whereby individuals can get their debts written off – in May.

The TUC said that polling carried out for it by YouGov shows that millions of people continue to struggle with the cost of living.

More than four in 10 of those surveyed said they had cut back on essentials such as food and utility spending this year, while 60 percent said they had reduced non-essential spending, including dining out and entertainment.

Around a fifth (19 percent) of respondents say they have fallen behind on household bills this year – a number that rises to over 1 in 4 (28 percent) for people aged 18-24.

Over a quarter (27 percent) say have they taken out debt (loans, credit) to cover unexpected bills since the start of the year. This number shoots up to over a third (37 percent) for adults aged 25-49 – when lots of families raise children.

The TUC has estimated that UK workers are on course for “nearly two decades of lost living standards”, with real wages not forecast to recover to their 2008 level until 2026.

It claimed the average worker would now be £14,700 better off if their pay had kept up with pre-crisis real wage growth trends since 2008.

Paul Nowak, the TUC general secretary, said: “Households across Britain are being pushed further into debt.

“No one should have to rely on credit cards and loans to make ends meet. But after 14 years of flatlining wages – and the worst cost of living crisis in generations – many families are at breaking point.

“Pay packets are still worth less today than in 2008 with working people on course to end this parliament poorer than at the start.”

Figures from the Insolvency Service showed that the number of DROs taken out by individuals reached a new record monthly high of 3,716 – up 8% on the previous record set in April 2024.

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