Families face £1,400 'debt timebomb' in 2024 with rise on credit cards and loans

29 December 2023 , 15:00

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The TUC warns that families have been left 'brutally exposed' to rising costs (Image: Getty Images/iStockphoto)

Families face a "debt timebomb" in 2024 with household borrowing set to increase by £1,400 on average, according to new figures.

The analysis by the Trades Union Congress (TUC) shows a sharp rise in unsecured debt, which includes personal loans, credit cards, and overdrafts. Next year unsecured debt per household is set to rise from £13,361 to £14,792 in real terms - a massive 11% hike. By 2026 it is forecast to increase to a record level of £17,200, which would exceed the previous high of £16,800 set in 2007.

The TUC warns that families have been left "brutally exposed" to rising costs while real wages are not forecast to recover to their 2008 level until 2028. The union also suggested the average worker would now be £14,800 better off if their pay had kept up with real wage growth trends since 2008.

In his New Year message TUC General Secretary Paul Nowak will say: "Every year the Tories stay in office the more families will be pushed into debt. This party of out-of-touch millionaires is more focused on clinging to power than on growing our economy and getting living standards rising again.

“If something doesn’t change, real wages won’t recover to their 2008 levels until 2028. These 13 years of economic stagnation have left working people brutally exposed to the cost of living crisis. We cannot afford a Tory government one day longer."

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A Government spokeswoman said: "Inflation falling to its lowest level in two years offers some relief to families but prices are still rising too quickly, which is why we have put in place one of the largest cost of living support packages anywhere in Europe worth on average £3,700 per household. We are also committed to supporting low paid workers through our record increase in the National Living Wage, while cutting taxes so that people can keep more of what they earn, and investing £90 million to fund free debt advice in England for those who need it.”

It comes as Jeremy Hunt mulls a tax cut for wealthy families at next year's Budget on March 6. In a desperate attempt to turn around the Tories' dire prospects at the ballot box, the Chancellor is said to be considering scrapping inheritance tax - costing billions of pounds.

The 40% tax only applies to wealthy people who have an estate worth £325,000. This rises to £500,000 if a home is given to a child or a grandchild - meaning a couple have a combined tax-free property limit of £1million when they die. According to Government figures, just 3.7% of all deaths in 2020-21 resulted in an inheritance tax charge.

Ashley Cowburn