British households in worst financial shape since Thatcher
UK households have seen their outgoings surpass their income for the first time in nearly 30 years, according to newly released ONS data.
On average, each UK household spent around £900 more than they received in income in 2017; amounting to almost £25bn.
The last time households’ outgoings last outstripped their income for a whole year was in 1988, although the shortfall then was much smaller at just £0.3bn.
Even in the run-up to the financial crisis of 2008 and 2009 – when 100% (and more) mortgages were offered to home buyers without a deposit – the country did not reach a point where the average household was a net borrower.
Households took out nearly £80bn in loans last year, the most in a decade; but they deposited just £37bn 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 were to continue, households could risk lacking enough collateral to cover their debts.
John McDonnell MP, Labour’s Shadow Chancellor, commenting on ONS findings, said: “In the same week that the Tory government delivered a slap in the face to workers over public sector pay, the ONS findings show the disastrous impact of eight years of austerity on the living standards of families.
“For the first time in nearly 30 years, we see average household outgoings surpassing incomes.
“The ONS findings are a stark example of how brutal Tory pay restraint and austerity has led to living costs outstripping earnings for families.”