UK households to take on £16bn more credit card and loan debt as living costs soar

Analysts forecast ‘significant’ rise in unsecured borrowing to pay for bills and essential purchases

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

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

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.