You are here: Home - Uncategorized -

Servicing big debt eats into more household budgets

Written by:

Paying off household debt has reached a record level and is stretching many household budgets to the limit of their capacity, according to accountancy firm Pricewaterhouse Coopers (PwC).

The cost of debt now takes up 19% of the average household’s disposable income, exceeding the previously record high level of 18% in late 1990.

With a hike in interest rates expected this week, PwC reckons consumer spending will slow down. “Many households have faced a squeeze on their finances due to a combination of modest earnings growth, rising utility bills, higher petrol prices and increased debt,” said John Hawksworth, head of macroeconomics at PwC.

He continued: “Looking ahead, we expect rising debt service costs to contribute to slower growth over the next two to three years.”

PwC has calculated that the income of households remaining after paying off debts and household bills rose by 3.1% a year between 2004 and 2006, although the rise in gross incomes per annum was 5.2%.

PwC also calculates that this will mean the UK’s economic growth rate will fall slightly in the year ahead, from 2.75% this year to 2.5% in 2008.

Related Posts


Tag Box




Financial fitness

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co... Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
Financial advisers in the FSA’s firing line

The FSA has hinted that financial advisers could be forbidden to call themselves “independent” if they earn commission from financial...