The debt of British households will hit a record high next year, new estimates show, surpassing the pre-financial crisis peak as a surge in credit card borrowing has financed extra spending in recent months.
The average household had unsecured debts amounting to £13,200 at the end of 2016, just below the £13,300 level at the end of 2008, on the eve of the credit crunch.
Analysts at the Trades Union Congress (TUC) expect that will rise to £13,900 by the end of this year, £14,300 next year, and keep on rising to £15,400 by the end of 2021.
The figures are calculated in 2016 prices and therefore take account of the inflation that has taken place over the intervening years.
It comes after Bank of England numbers showed households racked up an extra £1.6bn in consumer debts in March.
Borrowing increased by more than 10pc compared with the same month a year earlier as households increase spending despite the squeeze on living standards which has come from slow wage growth and rising inflation.
“We’ve got this problem because wages haven’t recovered,” said the TUC’s general secretary Frances O’Grady. “Credit cards and payday loans are helping to prop up household spending for now, but millions of families are running on empty.
“The next government must act urgently to deliver the higher wages Britain needs for sustainable growth. They must boost the minimum wage, and end pay restrictions for public servants like nurses, firefighters and midwives.”
Meanwhile the average household’s disposable income – the amount they have to save or spend after paying tax and receiving benefits – rose to £19,106 in 2015, according to the Office for National Statistics.
That is up 3.7pc on the year, though prices also rose by 1.5pc over the same period so the cash figure overstates the improvement in living standards.