MILLIONS of Britons are struggling to make ends meet and almost one third of the working population is facing financial distress, two reports published today revealed.
As many as 6.1 million consumers across the country had to cut back on food last year, while four million had to borrow money off family and friends, an index by Momentum UK measuring households’ financial wellness showed.
And one in five people are defaulting on a loan, bill, mortgage payment or rent, according to a second report by comparison website Which?.
The Which? study warned that 28 per cent of employed people are experiencing some form of financial hardship, such as relying more on overdrafts and loans or struggling to pay bills.
And 38 per cent of respondents expect their financial situation to get worse over the next year, with household debt, housing costs, food prices and fuel all expected to increase.
Meanwhile, the Momentum index unveiled a precarious picture for at least half of UK households, with four million people slashing their heating usage and three million selling possessions to raise money, as economic uncertainty prompted by the Brexit vote has taken its toll.
Fifty five per cent of households are “financially exposed” according to the index report – meaning their finances may take a hit from further economic swings.
And adverse events or wrong decisions could push another 17 per cent of households from the “financially unstable” into the “financially distressed” class, where people are most at risk of missing fixed payments and resorting to high-cost credit.
Private renters and Londoners lead the pack of the financially challenged, with young people and digitally-excluded savers also facing some sort of financial trouble.
The picture looks rosier for households in Wales – which boast the soundest finances – homeowners and older citizens.
On a more positive note, one of the authors of the Momentum UK report said that despite the recent political and economic instability, the index has remained remarkably stable over the past 12 months.
“Individuals in the UK continue to feel the benefit of a relatively stable macro-economy, with only a small minority reporting serious financial difficulties,” said Sharon Collard, a director at the University of Bristol’s personal finance research centre, which produced the report.
“But there is no room for complacency: the index continues to show that a large proportion of the population are financially exposed.
“The lack of longer-term financial resilience built into UK households leaves them poorly prepared for future adverse events such as predicted rises in essential spending (like energy) and stagnant earnings growth.”