Households become net borrowers for first time in nearly 30 years

Households across the UK spent or invested around £900 more on average than they received in income during 2017 - marking the first time in nearly 30 years they had more money going out than coming in.

The gap amounted to nearly £25 billion - or about a fifth of the annual NHS budget in England - according to an article on the Office for National Statistics (ONS) website.

Household outgoings last outstripped income for a full year in 1988, although the shortfall was much smaller at just £300 million, the ONS said.

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The article - titled Making ends meet: are households living beyond their means? - said: "Even in the run-up to the financial crisis of 2008 and 2009 - when 100% (and more) mortgages were offered to home buyers without a deposit - the country did not reach a point where the average household was a net borrower."

The ONS said that to fund this shortfall, households either have to borrow - at which point they could be living beyond their means - or dip into savings.

It said households took out nearly £80 billion in loans last year, the most in a decade.

In total, households accumulated more debt, mainly to loans, than assets - such as deposits, bonds, shares and pensions - in 2017 for the first time since records started in 1987.

The article warned: "If this were to continue, households could risk lacking enough collateral to cover their debts."

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People are borrowing more and saving less partly because of low interest rates seen over the past decade, the article said. Low rates keep the cost of borrowers' repayments down but make returns less attractive to savers.

"The base rate set by the Bank of England is just 0.5%, compared with almost 15% in 1990, making financial conditions better for borrowers rather than savers," the article said.

It also said not all households are living under the same budget pressures, with recent analysis finding the poorest 10% of households spent two and a half times their disposable income, on average, in the financial year ending 2017 - while the richest 10% spent less than half of their available income during the same period.

The article added: "For a long time, the average UK household was in a similar position to those in France and Germany.

"However, we're now much closer to Canada and the US than our European neighbours."

It suggested those who are struggling seek help from bodies such as the free Money Advice Service or StepChange Debt Charity.