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Why Has UK Household Debt Been Rising?


Wednesday 7th February 2018




Since the 2008 financial crisis, which saw countless banks and businesses go bust, the world has been in a state of recovery.

The UK's recovery in particular has been fairly slow, and the country is still a long way off from enjoying the same levels of prosperity that it did before the crisis. Despite the government aiming to reduce the UK deficit, household debt has actually been on the rise. Here are some of the main reasons for this.

Student Loans

Since the tuition fee cap was raised from £3,000 per year to £9,000, the majority of students have had to rely on a student loan to pay for their university tuition. This has undoubtedly contributed towards household debt, and it could well be the case that tuition fee caps continue to rise in the future.

Whilst students do not have to start paying back their debt until they earn over £21,000, some also take out short term loans whilst at university, increasing their debt further, and contributing to overall household debt in the country.

Stagnant Wages

It is no secret that UK wage growth has been unimaginably poor in recent years, and this poor growth is set to continue into the future. With wages now buying far less, it is no surprise that consumer spending is down. With less spending power coming from wages, it is only natural for people to turn to credit to buy the products they need.

Should wage growth pick up, though, it is likely that this reliance on credit will decrease, and people will be able to pay off their debts with greater ease. For now, however, many risk their debts spiralling out of control if they rely on credit too much.

Brexit

The general economic uncertainty which has pervaded the UK since it voted to leave the EU in 2016 has meant that the country faces an uphill struggle financially. With employers and businesses across the country unsure as to how their prospects may look after the departure from the EU, many households have seen their overall finances decline.

If this uncertainty continues for some time, then it is likely that households will continue to borrow in order to weather the Brexit storm. Once a clearer picture emerges from Brexit negotiations, though, there may well be a surge in confidence for business owners and households alike, which may help to offset the effects of the current uncertainty.

These are just some of the reasons that household debt in the UK has been steadily rising over the last years. Reducing this reliance on credit will certainly take time, but it is possible, and will most likely start by stimulating productivity in the economy and encouraging wage growth in the near future.

 

 

 

 

 

 

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COUNCILLORS CAMPAIGN FOR
SAFER EXIT FROM WHITTINGTON STORE -

Cllrs David and Paul Stone have been campaigning on behalf of local residents for a clearer and improved view of passing vehicles when cars are exiting the Tescos Store on the High Street at Whittington. More...

NEXT STOP, AWARD WINNING APPRENTICESHIP PROGRAMME -
Three talented young people are being given the opportunity to join one of the transport industry’s leading engineering apprenticeship programmes. More...

CHESTERFIELD TURNS OUT TO WELCOME HOME THE LANCERS -
The 9/12th Lancers, marched through Chesterfield this morning as part of their homecoming parade after returning from an eight month tour of duty in Afghanistan.
More, Pics & Audio...

CHESTERFIELD SOLDIER READY TO PARADE THROUGH HER HOME TOWN -
Soldiers from the 9/12th Royal Lancers (Prince of Wales') are looking forward to marching through the streets of Chesterfield tomorrow - Thursday, 3rd July More...

NEW FOOTBRIDGE IS OPENED AT CHESTERFIELD CANAL FESTIVAL -
The new Constitution Hill Footbridge, built over Chesterfield Canal in Staveley has been officially opened More...

 

 



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