Debts will become more expensive and more difficult to service for consumers and families across the UK over the next five years, according to official forecasts put together by the Office for Budget Responsibility (OBR).
The OBR has estimated that the cost of servicing household debts will rise by 29 per cent between the first quarter of 2018 and the same period in 2023.
Meanwhile, the share of household disposable incomes accounted for by debt servicing costs is expected to increase on average by as much as 12 per cent over that same time period.
Detailed forecasts on these subjects have come to light as a result of freedom of information requests made to the OBR by the Labour Party, which is describing the figures as lifting the lid on the consequences of “sluggish wage growth” within the UK economy.
The opposition political party insists that the official forecasts are embarrassing for the government and show the extent to which Britain’s relative lack of wage growth is “pushing many working households further into debt”.
Expectations at the OBR are now understood to be that a typical household will see the costs associated with servicing debts rise on average from around £1,983 per year in Q1 2018 to roughly £2,451 per year by Q1 2023.
If those estimates prove to be accurate a typical household will be paying an extra £468 per year in interest on their debts in five years’ time.
“These eye watering increases in the potential costs faced by working families at a time when incomes are being squeezed is deeply worrying,” said the Labour Party’s shadow chancellor John McDonnell.
“We need an urgent change of direction from [chancellor] Philip Hammond as the real burden of debt for households is becoming increasingly heavier.
“The next Labour government will cap interest on consumer credit, and introduce a £10 per hour real living wage, to help build a high wage, high skill economy for the many, not the few.”
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Almost one in three people living across Britain will rely on some form of borrowing to cover the costs of Christmas.
Consumers across Scotland are being urged not to let their financial situation deteriorate drastically through an overreliance on debt this Christmas.
Our Scottish based team can help advise you on your debt problems.