More Than 7 Million UK Residents Face Challenges With Increasing Home Expenses

A survey from the Financial Conduct Authority (FCA) has shown that over 7 million UK adults are struggling to manage household finances.

Increased Cost of Living to Blame

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The data in the report shows that the increased cost of living is to blame for financial stress, with mortgages, rents, utilities and food prices all increasing over the last two years.

Missed Payments Becoming More Frequent

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According to the survey, up to 5.5 million adults had missed a bill payment between summer 2023, and January 2024. This will have a lasting impact on credit scores, making future borrowing more difficult and expensive to obtain. 

Echoes Data About Lack of Savings

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Research by shows that (34%) of adults had either no savings (or less than £1,000) in a savings account, giving people no fall-back option in financial stress.

Inflation Is Sticky

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Whilst there are reports of inflation falling, many prices take time to reduce. Food, energy and utilities are priced based on previous markers, so take time to fall. This maintains higher prices longer than expected.

Some Retailers Taking Advantage

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In some industries (fashion, manufacturing, hospitality), industry experts have suggested that some of the high prices are down to retailers simply not reducing prices in line with falling costs, hoping buyers will keep paying higher prices.

Interest Rates Don’t Help

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The high Bank of England base rates provide headwinds for the economy, Increased borrowing costs hit the pockets of mortgage payers hard. 

Borrowing at 16 Year Highs

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The current Bank of England base rate is the highest in 16 years, so many people who were used to cheaper borrowing have been hit harder than they’re used to. 

Rents Increasing

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The survey data showed that 62% of renters had experienced an increase in their rent during the last 12 months. 

Rent Increase Outstripping Wages Growth

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The Office of National Statistics said that average UK private rents increased by 9.0% in the 12 months to February 2024.

Wage Growth Sluggish

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Figures from Statista show that ‘wages in the United Kingdom grew by approximately 6.1 percent in January 2024, although when adjusted for inflation, wages only grew in real terms by 1.8 percent.’

FCA Data Highlights the Struggles

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Executive director of consumers and competition at the FCA, Sheldon Mills, said its survey showed “many people are still struggling with their bills”.

Key Data Points From Survey

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A couple of standout points are that 7.4 million people feel “heavily burdened” by cost of living, and 5.5 million people missed a repayment in the previous six months.

Official Government Figures Show Household Income Dropped

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A report by the Department for Work and Pensions shows that heavier housing costs and reduced incomes had lowered the median household financial resources.

Second Jobs Common

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Information from the Office of National Statistics shows that currently over 1.16 million UK adults have a second job or income, to help cope with cost of living increases/

Data Moving in a Positive Direction

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At its worst, the number of people struggling with their finances was nearly 11 million. This was when borrowing rates were highest, and energy bills reached their peak. Many help measures hadn’t kicked in at that point either.

Still Way Ahead of Historical Norms

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Prior to the cost of living crisis, the number of people struggling financially was 5.8 million, according to the historical data.

Industry Calls for More Debt Help and Advice

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Richard Lane, chief client officer at StepChange, said “research has shown that people in financial difficulty are often struggling with anxiety, embarrassment and stigma, and tend to try and juggle their finances and cope for too long before seeking help, when they could benefit from lender support and free debt advice sooner,” he added.

No Surprises From Figures

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The slow wage growth and rapidly rising prices means there shouldn’t be any real surprises in the figures here. This is the consequence of a sustained rising cost of living in action. 

Look For Help

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If you’ve maximised your income possibility and reduced your financial obligations as much as you can, yet still find yourself struggling, reach out for help. Contact the citizens’ advice, your creditors and your bank. Seek help to make your situation easier – it’s better than the alternative.

The post Over 7 Million UK Adults Struggle With Rising Household Bills first appeared on Swift Feed.

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