Video transcriptNew figures released by the Trades Union Congress, or TUC, have highlighted the record level of household debt that continues to blight the financial wellbeing of people across the UK.
According to the body`s findings, total unsecured debt for UK borrowers (including consumer credit and student loans, but excluding mortgages) stood at £319 billion in the third quarter of last year - representing a record high.
The previous peak was reached back in 2008 at the start of the global economic crisis, when household debts in the UK stood at £290 billion.
Meanwhile, the TUC showed that unsecured debt as a share of household income is now 26.5 per cent - and this is the largest proportion to have been recorded within the last five years.
Unsecured debt per household rose to an average of £11,800 in the third quarter of 2015. Overall, this figure was up by £600 on the same time in the previous year.
Debt consolidation could therefore be an option for people currently struggling excessive debts but able to improve their cash flow by consolidating credit into one larger loan. This practice serves to bundle all of an individual`s borrowings into a single, more manageable payment. But it comes with risks and involves a change in approach to debt as one factor would be to try not borrow again until the new loan has finished.
TUC general secretary Frances O`Grady stated that `although employment has risen, wages are still worth less today than eight years ago. This has left families struggling to meet the rising cost of living`. Ms O`Grady went on to add that what is now needed is `a lasting economic recovery that focuses more closely on ensuring families can afford to pay their bills and raise their children without relying on credit cards and payday loans`.
Recent years have seen a considerable rise in banking safeguards for mortgage and personal borrowers across the UK, but what is now required is an upshift in living standards that reduces the likelihood of people having to try this type of borrowing.
The growth of consumer credit may worry the government as a signal that fundamental problems within the economy have not yet been fixed.
Indeed, the TUC chief concluded: `Rising household debt signals that too many people are still struggling to make ends meet. With pay growth slowing, and households facing a lost decade on wages, it`s no surprise that more families are relying on borrowing to meet the costs of day-to-day essentials.
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