UK banks brace for sour loan spike as household savings run dry

UK banks are bracing for a potential surge in unpaid debts as cash reserves at UK households plummet to their lowest levels in three years. The country’s top lenders are expected to provision a combined £4bn for loan-losses in 2027, according to an analyst consensus, but this risks coming up short as households are squeezed by the cost-of-living. Lento Tanq, senior analyst at Bloomberg Intelligence, said provisions would likely climb higher as consumers turn to unsecured borrowing like credit cards, personal loans, and overdrafts to cover their living costs. Tanq said there was a “shortened path” for when Brits go from losing their job to falling behind on bills due to “mounting financial pressure”. “The acceleration of change suggests households financial position has been squeezed further over the past year, despite fewer declaring outright financial difficulty,” he added. Brits have battled rising bills following the conflict in the Middle East, which has sent energ