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Are households living beyond their means?

Research published by the Office for National Statistics in July indicates UK households have seen their outgoings surpass their income for the first time in nearly 30 years.

On average, each UK household spent or invested around £900 more than they received in income in 2017, amounting to almost an extra £25 billion (or about one-fifth of the annual NHS budget in England).

Households’ outgoings last outstripped their income for a whole year in 1988, although the shortfall was much smaller at just £0.3 billion. Even in the run-up to the financial crisis of 2008 and 2009 – when 100% (and more) mortgages were offered to homebuyers without a deposit – the country did not reach a point where the average household was a net borrower.

To fund this shortfall, households either have to borrow – at which point they could be living beyond their means – or dip into their savings. The data shows they are borrowing more and saving less. Households took out nearly £80 billion in loans last year, the most in a decade; but they deposited just £37 billion with UK banks, the least since 2011.

Read Office for National Statistics - Making ends meet: are households living beyond their means?