Struggling Households To Borrow £16bn To Pay Bills

Households will increasingly use credit cards to cover bills and essential purchases as living costs rise sharply this year, according to a new report.

- Ben Chapman, Credit Cards

The EY Item Club forecasts a “significant” rise in credit card borrowing and unsecured loans, reversing a trend which saw consumers pay off debts during the pandemic.

It expects consumer credit to jump by £16bn this year, a rise of 7.9 per cent, followed by a 5.5 per cent increase in 2023.

The figures will add to pressure on Rishi Sunak to announce more financial support as Britain faces its sharpest fall in living standards since at least the 1950s.

The chancellor is understood to be considering a range of additional help but said last week that it would be “silly” to offer more support for rising energy bills now.

He is said to be hoping to wait until the autumn before unveiling any further assistance, but faces calls to act urgently as a growing array of economic warning signs begins to flash.