British household debt to balloon – report

25 Nov, 2023 06:11 / Updated 1 year ago
The burden is expected to shoot up to £151 billion by 2026, according to a tax and spending watchdog

Household debt in the UK will rise from the current level of £73 billion ($92 billion) to $190 billion in 2026, the Office for Budget Responsibility (OBR) reported this week. The increase means the average debt load per household will surge to the equivalent of around $6,700. 

According to the forecast, the cost of paying back the debt will be some $63 billion higher than it was during the 2008 financial crisis.

People will be forced to shell out an extra $289 per month by 2026, compared with $50 that the average earner will save from Chancellor Jeremy Hunt’s newly announced cut to National Insurance.

According to The Telegraph, the Liberal Democrats have attributed the soaring debt burden to the Bank of England’s interest rate hikes.

“This is a horror show for Brits. There is no end in sight to the mortgage nightmare faced by millions,” the party’s Treasury spokesperson, Sarah Olney, was quoted saying.

“Not only have household finances been clobbered by a barrage of tax rises, but now they face household debts not seen since the financial crisis,” she added.

According to a separate report by the OBR, the UK’s economic growth in 2025 and 2026 will be lower than the watchdog previously predicted. The OBR also forecast that households will suffer the biggest five-year squeeze in living standards in peacetime, with real household disposable income per head estimated to be 3.5% lower than its pre-pandemic level.

The decline is the largest in real living standards since the Office for National Statistics started compiling records in the 1950s, according to The Telegraph.

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