Resolution Foundation research finds UK consumer debt at lowest level since at least 1999

Consumer debt in the UK has fallen to its lowest level since at least 1999, according to research published by the Resolution Foundation on 3 March 2024. The think tank says consumer debt, which it defines as credit cards, overdrafts and personal loans, has dropped from 23% of household disposable incomes in the mid-2000s to 13% today¹.

The research describes two phases since the start of the pandemic. During lockdowns, households paid down debt to the tune of £26bn between December 2019 and March 2021. More recently debt has been rising again, but not as fast as incomes. The foundation points to lenders tightening access to loans, and notes that higher inflation can partially "inflate" debts away¹.

The scale of the change is put at £1,700 more per household if 2019 debt levels had persisted. Even after interest rate rises, the foundation says British families are spending less servicing their consumer debts than before the pandemic¹.

The foundation says the debt has not simply shrunk but shifted. Rather than borrowing on credit cards, people on lower incomes have been falling behind on priority bills such as rent, utilities and council tax. Energy bill arrears are the highest since records began in 2012. People asking Citizens Advice for help have on average £1,000 less credit-card debt but more than £500 higher bill arrears since Covid¹.

The article was written by Torsten Bell and originally appeared in The Observer¹.

Why it matters for households

The headline fall in consumer debt reflects what households collectively owe on credit cards, overdrafts and personal loans relative to their incomes, not a uniform improvement in every household's position. The foundation's figures cover the period to 2024 and describe averages across the UK; they do not report separate figures for England, Scotland, Wales and Northern Ireland, and no nation-by-nation breakdown of this debt measure has been reported¹.

The practical change described is a shift in the type of debt people hold. For households behind on rent, energy or council tax, the foundation notes that interest does not mount up on bill arrears in the way it does on credit cards, but that unpaid bills can lead to eviction or the power being cut off¹. Energy bill arrears are at their highest since records began in 2012, and the foundation reports that Citizens Advice clients now carry on average £1,000 less credit-card debt and more than £500 more in bill arrears than before Covid¹.

For households still repaying consumer credit, the foundation says families are spending less on servicing those debts than before the pandemic, even after interest rate rises, and that lenders have been tightening access to loans¹. The research does not set out what happens to any of these measures after March 2024.

What happens next

The research calls on politicians and policymakers to keep up with the changing shape of household debt, but sets out no dated measures or timetable¹. No further publication date or policy response is given in the research.