Unsecured debt surpasses pre-crisis peak
The average UK household is set to owe close to £10,000 in unsecured debt by the end of 2016, more than ever before in cash terms, according to PwC’s latest report on the Consumer Credit market.
Total outstanding unsecured borrowing grew by nearly £20 billion in 2014 or 9%, its fastest rate of growth in at least a decade, to reach £239 billon or close to £9,000 per household in 2014. In cash terms, the figure surpasses its pre-financial crisis peak.
The report suggests that while most Britons are currently in control of their borrowing, and in their ability to remain so, there could be challenges ahead.
The total household debt (including secured debt) to income ratio is projected to reach around 172% by 2020 – exceeding its previous peak in the run up to the financial crisis.
However, consumers are less worried about their job security than they were in PwC’s last survey, with just 13% concerned they may lose their job in the next 12 months, down from 16% in 2013 and 20% in 2011. While just over a quarter (26%) expect their pay to be frozen or decreased over the next 12 months, down from 48% of people in the aftermath of the crisis (2010).
The survey also shows dependence on credit to pay for essentials such as food and household bills has fallen to its lowest level since the survey began, with only 12% having done so in the past 12 months, down from 15% in the aftermath of the crisis (2010).