The number of UK households facing acute financial strain has risen by almost 60% since October and is now higher than at any point during the coronavirus pandemic, a survey found.
The abrdn Financial Fairness Trust and researchers at the University of Bristol estimated that 16% of households, or 4.4 million, are in “serious financial difficulties” and a further 20% are “struggling” to get by.
The findings illustrate the growing toll being taken by the worst cost of living crisis in a generation. The squeeze is set to intensify in October, when another spike in energy bills is expected to see inflation top 11%.
The pressure on the government to do more to help comes amid a period of political turmoil after Prime Minister Boris Johnson was forced to resign last week. In May, his government announced an extra £15 billion ($18 billion) in cost of living support but calls are growing for additional aid to be announced well before a successor for Johnson is chosen.
“Times are tough for everyone, but it’s those on the lowest incomes who are particularly feeling the effects of rising prices,” said Mubin Haq, chief executive officer of the trust. “Wages have largely stagnated and are no longer keeping pace with inflation; and social security is lower in real terms than it was over a decade ago. A more comprehensive and longer-term plan is urgently needed to ensure living standards do not sink even further.”
{{/usCountry}}“Times are tough for everyone, but it’s those on the lowest incomes who are particularly feeling the effects of rising prices,” said Mubin Haq, chief executive officer of the trust. “Wages have largely stagnated and are no longer keeping pace with inflation; and social security is lower in real terms than it was over a decade ago. A more comprehensive and longer-term plan is urgently needed to ensure living standards do not sink even further.”
{{/usCountry}}More than half of those polled for the Coronavirus Financial Impact Tracker consider their financial circumstances to be worse than during the early pandemic. When the same question was asked in October, only a third thought their situation had deteriorated.
The report published Monday described the lengths many are going to in order to save money.
Of those in serious financial difficulty, 71% have reduced the quality of food they eat, 36% have sold or pawned possessions and 27% have canceled or not renewed insurance.
Steps to save on energy bills this year include bathing and cooking less, while more than a fifth of casual workers had stopped or reduced pension contributions. Single parents, social renters and households with children are being hit hardest.
“It’s particularly worrying that people are potentially storing up future financial problems for themselves,” said Sharon Collard, a professor at the University of Bristol.