High levels of personal debt are linked to "stagnant" wages and consumers will owe increasingly large amounts unless or until this changes, …
High levels of personal debt are linked to "stagnant" wages and consumers will owe increasingly large amounts unless or until this changes, according to general secretary of the Trades Union Congress (TUC) Brendan Barber.
A speech Mr Barber will deliver at the University of Liverpool today (October 26th) on his alternative vision of the economy has identified this as a key issue, with the TUC boss stating the share of gross domestic product going into worker pay packets has declined from 65 per cent in the late 1970s to 53 per cent now.
He said: "As wages have stagnated, debt has soared. As incomes are squeezed further, the Office for Budget Responsibility expects household debt in this country to reach over £2 trillion by 2015 – an albatross around the neck of our economic future. "
Mr Barber argued that unless this changes, economic growth will be held back.
Those struggling with a growing personal debt problem may help themselves by taking on a debt management plan, to spread the payments over a longer period.
Those who are beyond being able to pay may consider insolvency – with bankruptcy not being the only option as they might be able to take out an IVA if they owe £15,000 or more.
Such an arrangement would involve interest being frozen, monthly repayments trimmed and all remaining debt written off after five years.
The wage problem Mr Barber is referring to has been prominent this year, with the most recent Office for National Statistics data showing Consumer Prices Index inflation to be 5.2 per cent, while pay is running at 2.8 per cent with bonuses and 1.8 per cent without.
By James Francis