Household debt servicing costs set to jump by almost a third
New analysis from Labour has exposed that household debt servicing costs are officially forecast to jump up by almost a third over the next five years under the Tories.
The data obtained by Labour under a Freedom of Information (FOI) request from the Office for Budget Responsibility (OBR) reveals that from 2018 Q1 to 2023 Q1 forecast household debt servicing costs will rise by 29% and will increase their share of household disposable income by 12%.
In the previous five years from 2013 Q1 to 2018 Q1 household debt servicing costs had fallen by 9% and reduced their share of household income by 23%.
These embarrassing figures for the Government were not published in the Budget in November. It lifts the lid on the wider consequences of sluggish wage growth, which is failing to keep up with rising prices and pushing many working households further into debt.
These new figures show what this could mean for households on average, as it could see their annual debt servicing costs (the interest they pay on their liabilities) soar from £1,983 in Q1 2018 to £2,451 by Q1 2023 – an increase of over £468.
John McDonnell MP, Labour’s Shadow Chancellor, said:
“These eye watering increases in the potential costs faced by working families at a time when incomes are being squeezed is deeply worrying.
“The Chancellor is not lifting a finger to tackle the growing crisis in wages we face as prices race ahead of earnings for many working households.
“We need an urgent change of direction from Philip Hammond as the real burden of debt for households is becoming increasingly heavier while he goes ahead with tax giveaways to the super-rich and big business, and continued austerity for everyone else.
“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 and not the few.”