1.2Mln UK Families Earning Under $3,300/Month Overwhelmed With Debt

Overall, 1.2 million low income households in the United Kingdom are estimated to be in extreme problem debt, according to a report.

MOSCOW (Sputnik) — Around 1.2 million UK families with a household annual income below 30,000 British pounds (about $39,600) are extremely indebted, meaning that they are paying out more than 40 percent of their gross household income on unsecured debt repayments amid the wage stagnation in the country, a new report revealed on Tuesday.

The report, titled "Britain in the Red — Why we need action to help over-indebted households," was published by the two trade unions, namely the UK Trades Union Congress (TUC) and UNISON.

"The share of extremely over-indebted low income households rose to 9 per cent in 2015, up from 8 per cent in 2014 and three times as many as in 2012. Overall, 1.2 million low income households are estimated to be in extreme problem debt. Even more worrying is that extreme over-indebtedness is growing particularly quickly in low income households that are in employment (excluding self-employment)….Most obviously actions are needed to strengthen household incomes through higher wages," the report said.

The report also found that 3.2 million households or one in eight households in the United Kingdom are in problem debt, which is defined as paying out more than 25 percent of their gross household income on unsecured debt repayments. What's more, it revealed that 1.6 million or one in 16 households are extremely indebted.

According to a July TUC report that analyzed the Organization for Economic Cooperation and Development (OECD) data, UK real wages declined by 10.4 percent between 2007 and 2015.