According to an TUC report, UK households will rack up additional unsecured debts totaling more than 1,600 pounds sterling this year. This includes loans and credit card debt.
According to the TUC, its analysis shows that average household debt, including credit cards and loans, but excluding mortgages, will increase by 9.4% or £1,660 in real terms this year.
This was the highest annual increase in cash terms recorded since 1987.
The trade union group said that its findings were a mockery to the government’s claims that the “plan is working”, which reduces inflation and the pressure on household finances, was actually working.
official figures show that in England and Wales, a record number took out debt relief orders (DROs) in May. A DRO is a type of insolvency in which individuals can have their debts forgiven.
The TUC claimed that it analyzed official debt data as well as Office for Budget Responsibility projections.
Some borrowing costs reached record levels during the crisis. This increased pressure on the consumer as higher housing, energy, and food bills forced households to take on more debt and borrow.
On 31 May, The TUC claimed that the average worker’s pay would have been £14,700 higher if it had kept pace with real wage growth since 2008.
Last month, when it emerged that UK inflation had fallen to 2.3% in April, its lowest level for almost three years, Rishi said: “This is evidence that our plan is working, and that the hard decisions we’ve taken are paying off.”
Paul Nowak, general secretary of the TUC, said that its findings “showed how out-of-touch this Conservative government is with the people’s struggle”.
Insolvency Service figures show that individuals have taken out 3,716 DROs, a record high. This is an 8% increase over the previous April 2024 record.
Some people view a DRO as a cost-effective alternative to bankruptcy for those who cannot pay their personal debts.
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