Yahoo Finance Brits in 'unprecedented' debt in run-up to Christmas
UK households were in significant debt for an “unprecedented” length of time even before Christmas spending began in earnest, new figures show.
The latest figures from the Office for National Statistics (ONS) showed that in the three months up to September, household borrowing was at its highest level since early 2017, making up 1.6% of GDP.
Rob Kent-Smith, head of national accounts at the ONS said it was the first time on record that households had consistently borrowed more than they received overall for two whole years.
“Households continued to spend more than they received, for an unprecedented eight quarters in a row,” he said.
READ MORE: Where UK house prices are heading in 2019
ONS figures also showed that household disposable income did not grow at all over the summer, as inflation and increased self-employment tax payments wiped out wage growth.
Christmas spending could exacerbate the trend for household borrowing. If consumers continue to endure the twin drag of low wage growth and an increase in the cost of living, they may borrow in order to fund their spending in the festive period.
The ONS also reported that the households saving ratio fell to its joint third lowest ever, to 3.8% of GDP, down from 4.1% in the previous quarter.
In September this year, Bank of England governor Mark Carney identified household debt as a threat to the UK’s financial services sector.
That led to the Bank introducing stricter rules on lending to those who may struggle to repay mortgages and other borrowing.
