More than 7 million adults still struggling to pay bills

According to recent surveys, a staggering 7.4 million UK adults are still struggling to pay bills due to the high cost of living.¹

The positive news is that the number is lower than last year. However, many households are feeling heavily burdened and as many as one in nine adults have missed a bill or credit payment in the six months up to January 2024.¹

The facts, according to the FCA, are concerning:

•     7.4 million people feel heavily burdened by their financial commitments
•     5.5 million people have missed a repayment of some kind in the six months to January 2024
•     5.9 million adults have no disposable income
•     28% of adults are finding it difficult to cope financially
•     26% of people are working extra hours or a second job to help ends meet
•     12% of people have missed meals due to a lack of funds

The report by the FCA also highlighted that approximately 50% of adults have cut back on food shopping and delayed purchasing ‘extras’, such as eating out and new clothes.

The cause of continued hardship

The dramatic increase in inflation which happened throughout the later part of 2022 and the first half of 2023 has started to lower but is still significantly higher than a few years ago. Inflation increases have been triggered by a large number of market uncertainties, such as freak weather causing food chain issues, the war in Ukraine causing energy and food chain issues, and perhaps even Brexit.

The level of inflation is directly linked to the price of goods, from food to electronics. High inflation means high price rises. Although inflation is starting to rise at a much slower rate, the cost of food and household bills is significantly higher than several years ago.  

This problem is compounded by wages not increasing in keeping with inflation. In real terms, money doesn’t go as far and people are worse off. Those with the lowest incomes will inevitably be the hardest hit. The FCA estimates one in nine people have no disposable income.¹

Borrowing isn’t necessarily the answer. Even if it was, interest rates have climbed alongside inflation. They are now at the highest level for 16 years and most people can’t afford to borrow money.  

Handling financial hardship

Conor D’Arcy, the interim chief executive of the Money and Mental Health Policy Institute found it encouraging that the number of people struggling with bills has dropped.¹ However, he emphasised that there was more lenders could do to help.  People on low incomes and renters were more likely to face issues.  Concerningly, many of these people don’t seek help because they are embarrassed, anxious, and feel stigmatised.

If you’re struggling, take action today:

•     Talk to a trained debt advisor such as the Citizen’s Advice Bureau
•     Let the CAB help you total your debts and work out a viable payment plan
•     Ask your creditors for a payment plan, many organisations, such as energy suppliers must give you this option before trying to recover money owed
•     Check you’re getting all the benefits you’re entitled to

Above all, stay calm. As long as you are trying to deal with your debt problems you’ll be able to find a solution which works.

Sources

1. https://www.bbc.com/news/business-68765769

All the information in this article is correct as of the date of publishing. The opinions expressed in this publication are those of the authors Euxton Mortgage Market. The information provided in this article, including text, graphics and images does not, and is not intended to, substitute advice; instead, all information, content and materials available in this article are for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

May 2024