Citizens in the United States aren’t the only ones sitting on loads of unsecured debt. Their counterparts across the pond in the United Kingdom also have rising total household debt and student loans are partly to blame.
According to a recent BBC report that cited data from TUC, the Trades Union Congress, the average household in the U.K. has debt of £12,887, not even including mortgages. What’s more, altogether Brits owe £349bn in unsecured debt. The debt, according to the BBC, is the highest amount households have had in eight years.
According to the TUC, the level of unsecured debt as a percentage of income that a household has is now at 27.4 percent, which is also the highest amount seen since 2008. Adding to the problem is the less than stellar wage growth that has forced more households to rely on borrowing money.
“These increases in household debt are a warning that families are struggling to get by on their pay alone,” said Frances O’Grady, the TUC’s general secretary in the BCC report. O’Grady argued that if the government doesn’t intervene and help the working class in the U.K., many Brits could finish 2017 in a worse financial situation than when the New Year rang in.
Despite the concerns raised by the TUC, the Bank of England isn’t worrying. Officials indicated that the debt levels aren’t something to be too concerned about, thanks in part to low interest rates – which are expected to remain low for some time.
“There are reasons not to be too alarmed about it ticking up, but it is absolutely something we will watch carefully,” Andy Haldane, Bank of England’s Chief Economist said.
Household debt in the U.K. may be a growing problem, but it still pales in comparison to the amount of household debt in the U.S. According to the Federal Reserve of New York, as of 2016, credit card debt stood at $16,061 per household while outstanding mortgages averaged $132,529.
Author: Andrew Rombach
Join the LendEDU Newsletter
News, insights, & tips once a weekThanks for submittingPlease Enter a valid email
Student Loan Guides
Student Loan Reviews