The average household will spend an extra £1,000 more on paying off debts over the next two years, according to an Office for Budget Responsibility (OBR) forecast. It is estimated that the cost of servicing household debts – including mortgages, credit cards and personal loans – will rise by 52%. The increase means almost 5% of families’ disposable income will go toward debts, the highest proportion since 2008/09. The OBR calculates that households spent £55bn servicing debts in 2021/22, with the total set to jump to £83bn by 2023/24. The increase will be driven by the higher interest rates imposed by the Bank of England as it looks to tackle inflation, with variable-rate mortgage borrowers set to face steeper bills. Liberal Democrat leader Sir Ed Davey has urged the Government to deliver greater support for those facing higher costs, warning that the Chancellor is “ploughing on with a deeply unfair tax hike and offering no meaningful help.”
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