Financial wellbeing in June 2024

Summary

• Financial difficulty fell in the month to June 12th, with half of households making adjustments to cover essential spending. This is significantly lower than 2022 and 2023 levels
• Households on lower incomes and those with working age parents have seen less improvement in their financial situation compared to higher income groups and pensioners
• Consumers’ confidence in their household financial situation fell in the month to June 12th. A fifth of consumers (21%) think their household finances will improve over the next 12 months, while 28% feel they will worsen

Financial difficult has declined amongst all UK adults

In the month to June 12th, the proportion of households missing a housing, bill, loan or credit card payment fell to 6.7% - this is the lowest rate so far this year. This month marks the third straight month we have observed either an equal or falling missed payment rate compared to the previous month.

In addition, fewer households have made adjustments to cover essential spending. The proportion of households making at least one adjustment to cover spending such as utility bills, housing costs, groceries, school supplies and medicines in the last month fell to half of UK households (50%). Adjustments include cutting back on essentials, dipping into savings, selling possessions or borrowing. This is significantly down from 58% at the start of the year and is the lowest level since the start of 2022.

6.7% of households said they had missed a payment in the month to June 12th and half of households made at least one adjustment to cover essential spending

Households on lower income or with working age parents are still struggling

While fewer households have needed to adjust their spending over the last 18 months, this improvement has mainly happened in higher income households. Compared to a year ago, there has been an eight percentage point fall in the proportion of households earning above £41,000 making adjustments (55% in June 2023 to 47% in June 2024). Households on less than £41,000 have only seen one percentage point reduction over the same period (61% to 60% for households under £21,000 and 54% to 53% for households with an income between £21,001 and £40,000).

Financial adjustments by household income

Looking at the missed payment rate split by family type shows a stark difference in experiences. Whilst only 0.2% of pensioner households missed a payment in the month to June 12th, 13.2% of households with working age parents missed an housing, bill, loan or credit card payment. Whilst this 13.2% level is slightly below peaks of over 15% in 2022 and 2023, it shows that many families are continuing to struggle with the cost of living.

 Missed payments by family type

Confidence in household financial situations fall

Consumers are feeling less confident about their current and future financial situation. Compared to last month, consumer confidence in their current financial situation fell 7 points (to +15) and confidence in their future financial situation fell 8 points (to -7). 

In contrast, consumers’ confidence in the future UK economy has increased for the fourth straight month to -12, the highest level since August 2021. This score reflects a quarter of UK adults (26%) thinking the UK economy will improve over the next 12 months, compared to 37% who think it will worsen.

Household financial confidence falls in the month to June 12th

Households currently feeling worse are more pessimistic about the future

Households who rated their current financial situation as ‘poor’ were much more likely to think their future situation will worsen (50%) than those whose current situation is ‘good’ (13%). Only a small percentage (15%) of households who rated their current financial situation as ‘poor’ feel that their future situation will improve.

 Households currently worse of are most pessimistic about their finances over the next 12 months

Many respondents expressed serious concerns about their household finances, fearing that their situation will worsen due to ongoing price rises and the increasing cost of living.

“Energy prices are destroying us as we just cannot afford it, we are over £2,000 in debt.” Male, 45-54, West Midlands

Rent increases were also a major worry for many:

“Cost of living is ridiculous! We aren't living anymore. We are trying to survive every single day. Rent prices are extortionate, way more than what average people can pay. Food prices are ridiculous. Even the just essentials and the cheaper versions have gone up 20p+ so it all adds up.” Female, 25-34, South East

“Because my rent keeps rising every year, [it has] increased by 30% and grocery shopping costs keep rising every month, plus the cost of the energy bills.” Male, 34-45, London

In contrast, those who feel optimistic about their household finances cited lower inflation and pay rises as key factors.

“I believe that my income will grow ahead of inflation over the next year” Male, 25-34, Scotland

“Because I now have a full time job. Was struggling with securing a job but got successful recently.” Female, 25-34, North East

Summary

As the general election approaches, the economic landscape reveals a stark divide. Whilst some consumers are seeing improvements in their household finances, many households continue to struggle to meet their living cost. Particularly hard hit are those with lower incomes and working age parents, who have seen less financial relief compared to other groups. The outlook is not good for those already facing hardship, with a continued pessimism about their future. 

The incoming UK government will face a formidable challenge: to alleviate financial difficulties and restore consumer confidence to pre-cost-of-living crisis levels. Addressing these issues will be crucial for fostering economic stability and improving financial conditions for everyone.

Which? has a Consumer Agenda for Government that we believe the next government should bring forward to improve consumer outcomes and boost economic growth.

Methodology

The fieldwork was conducted by Yonder on behalf of Which between 12th and 14th June 2024. A sample of 2,079 UK adults were surveyed online and weighted to be nationally representative.