British households spent an average £900 more than they earned last year, the first time in almost 30 years that outgoings have surpassed incomes, official figures show.
The Office for National Statistics (ONS), which released the data, questioned whether households are now living beyond their means.
The last time the outgoings of households surpassed their income for a year was in 1988, when the shortfall was held at £300m, the Times reported.
Phil Andrew, chief executive of the charity StepChange, said: “The reality is that too many households cannot make ends meet, however hard they try.”
The ONS said even in the run-up to the financial crisis of 2008 and 2009 — when 100% mortgages were being offered to homebuyers without a deposit — the average household did not borrow more than it brought in.
Households have struggled over the past year from a squeeze on living costs. Wage growth has been sluggish while shop prices rose rapidly after the fall in the pound following the Brexit vote.
The savings ratio, which measures how much disposable income people are saving, fell to 4.5% in the first three months of this year – the third lowest level on record.
The figures reveal a stark divide between the rich and poor. The poorest 10% of households spent on average two and a half times their disposable income last year, whereas the richest 10% spent less than half their available income during the same period.