“Households spent £900 more than they earned in 2017 marking the first time in THIRTY years the country has had more going out than coming in” | Dailymail.co.uk | Scottish Trust Deed Info | Free Debt Help Scotland
Households spent an average of £900 more than they earned in 2017, data says
Shortfall across the country ran to £25billion and the first recorded since 1988
A gap in household budgets means people are either borrowing or using savings
Households are spending more than they earn for the first time in 30 years.
The average family went £900 in the red last year – plugging the gap by raiding savings or taking on debt.
The national shortfall was a staggering £25billion, according to the Office for National Statistics. The last time households collectively overspent was in 1988, when the deficit was a modest £300million.
The poorest families fared the worst last year, typically spending around two-and-a-half times their disposable incomes.
Financial experts said the figures were profoundly worrying and warned that economic growth based on debt was unsustainable.
There are growing fears over credit card debt, car finance deals and the return of super-sized mortgages.
Ultra-low interest rates are also seen as a disincentive to save.
In a startling warning yesterday, the ONS said: ‘To fund the shortfall, households either have to borrow, at which point they could be living beyond their means, or dip into their savings.
‘And our data show they are borrowing more and saving less. Even in the run-up to the financial crisis of 2008 and 2009 – when 100 per cent mortgages were offered to home buyers without a deposit – the country did not reach a point where the average household was a net borrower.’
In a sign that families are losing the habit of putting money aside for a rainy day, the proportion of disposable income that is saved has fallen to just 4.1 per cent. This is the third lowest since records began in 1963 and down from almost 15 per cent in the 1990s.
The ONS said the typical household’s outgoings were £900 higher than their incomings last year.
The incomings relate to salaries, pensions, benefits and other income before tax and other costs.