Household debt surges amid Gen Z borrowing binge

EMMA TAGGART

Mon, February 16, 2026 at 11:39 PM GMT+9 2 min read

Household debts are rising at their fastest pace in seven months, fuelled by an increase in borrowing among the young.

Borrowing rose across all age groups apart from 25 to 34-year-olds in February, according to the S&P Global Consumer Sentiment index. Debts climbed the fastest among those aged 18 to 24.

Gen Z debt surged, with this age group struggling to find work. The unemployment rate for 16 to 24-year-olds jumped to 15.3pc in the three months to September.

Britain’s youth unemployment rate has now climbed above the European Union’s for the first time since comparable records began in 2000, according to data published by the OECD.

Catherine Mann, an external member of the Bank of England’s Monetary Policy Committee, told The Telegraph last weekend that government policy had been the biggest driver of the recent surge in the youth jobless rate.

Ms Mann warned that “substantial” increases in the minimum wage started under the Tories and continued by Labour had “manifested in unemployment” for the young.

1702 Household debt is on the rise

New unemployment figures will be released by the Office for National Statistics on Tuesday. Economists expect the unemployment rate will climb to 5.2pc in the three months to December, up from 5.1pc in the three months to November.

Jobs are scarce as businesses grapple with successive inflation-busting increases to the minimum wage as well as last year’s increase in employer National Insurance contributions.

Artificial intelligence is also prompting some employers to cut back on entry-level roles as they use the technology to perform tasks typically completed by junior staff.

Maryam Baluch, an economist at S&P Global Market Intelligence, said: “Households are growing increasingly worried about debt in particular, especially as a growing need for credit was met with the steepest decline in availability of loans since August 2024.”

The S&P survey also found that confidence in the labour market slid to its lowest level since June 2025.

Rising debt and concerns about the economic outlook are causing households to delay major purchases and rein in consumer spending.

The S&P’s consumer sentiment index showed households were more pessimistic regarding their financial prospects for the coming next 12 months. Confidence in making big ticket purchases, such as appliances, fell to its lowest level in 10 months.

Alongside rising debt levels, cash availability and savings levels fell across the UK. Households in the East Midlands saw the fastest decline in savings as they dipped into their reserves to cover their expenses.

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