The latest Financial Vulnerability Index research, undertaken by Lowell and Opinium, shows that households in the UK are:
- Using up their savings: 6 in 10 lack sufficient savings and more than a third have less than £1,000 in emergency savings – the highest figure recorded.
- Relying more on riskier forms of credit: For the first time, over 1 in 10 households are using alternative financial products like payday loans and buy-now-pay-later schemes.
- Feeling worse off: 74% experienced no improvement in their personal financial situation in the last 12 months.
- Pessimistic about the future: 69% expect no improvement in their personal financial situation in the next 12 months.
John Pears, UK CEO of Lowell, said:
“It’s been five years since the first stay-at-home order was issued but, as a country, we’ve never recovered financially. Vulnerability is approaching pandemic peaks again and, given the broader economic environment, this is only likely to get worse.
“Nearly all our indicators are in the red. Arrears are up. Savings are being eroded. Reliance on social benefits is increasing. These are all issues that have been bubbling away under the surface and are now coming to a head – and it’s not just the poorest who are struggling. Families in some of the most affluent neighbourhoods in the UK have seen their safety net fall away and are now exposed to income shocks. Layer on top of this rising bills across the board, and we have a population teetering on the edge.
“It’s important, now more than ever, to tackle the root causes of problem debt to prevent more people and families from going over the cliff edge. This must be a joint effort between our industry – on the frontline of debt – and policymakers.”
Read more about the impact on middle class households here.