Thursday, 23 September 2021
HOUSEHOLDS in the UK are living beyond their means, according to the Office of National Statistics.
It reports that in July, outgoings have surpassed income for the first time in nearly 30 years.
On average, each UK household spent or invested about £900 more than they received in income in 2017, amounting to almost £25 billion.
The last time households’ outgoings last outstripped their income for a whole year was in 1988, although the shortfall was much smaller at just £0.3 billion.
Even in the run-up to the financial crisis of 2008 and 2009, when 100 per cent mortgages were offered to home-buyers without a deposit, the country did not reach a point where the average household was a net borrower.
To fund this shortfall, households are either having to borrow or dip into their savings and the ONS data indicates that they are borrowing more and saving less.
Households took out nearly £80 billion in loans last year, the most in a decade and they deposited just £37 billion with UK banks, the least since 2011.
In total, households accumulated more debt, due mainly to loans, than assets such as deposits, bonds, shares and pensions in 2017 for the first time since records began in 1987. If this trend continues, households could risk not having enough collateral to cover their debts.
13 August 2018
POLL: Have your say