Financial wellbeing in March 2023

Summary

• 8.8% of households reported having missed or defaulted on a payment in the last month, meaning it has remained above 8% each month of the year so far. 
• Six in ten (60%) of households had made an adjustment to cover essential spending in the last month, sustaining the high levels seen for the past year.
• However, consumer confidence is returning. All measures of sentiment picked up somewhat this month, continuing an upward trend since autumn of last year.

Financial difficulty levels remain consistently high

The proportion of households who had missed a housing, bill, loan or credit card payment in the last month was at 8.8% in March, a slight but not statistically significant increase on the 8.2% and 8.1% seen in January and February, respectively. 

We reported last month that the beginning of 2023 has not followed the pattern of previous years in which a sharp spike in the missed payment rate in January was followed by a lower rate from February onwards. The missed payment rate in January 2023 was lower than in 2022, but it has not decreased in the months following. This means the rate has remained above 8% in each of the first three months of 2023, which is the first time we have seen the rate remain so high for multiple months. With the exception of December, the rate has remained at or above 8% since September 2022. 

The average monthly missed payment rate in 2020 (from April onwards) was 4.9%, increasing to 6.4% in 2021, 7.7% in 2022 and 8.4% in the first quarter of 2023.

Six in ten (60%) households reported making at least one adjustment to cover essential spending such as utility bills, housing costs, groceries, school supplies and medicines in the last month. Adjustments include cutting back on essentials, dipping into savings, selling possessions or borrowing. This is consistent with the level seen for the past few months. 

The adjustment rate increased drastically in the first few months of 2022, going from 42% in December 2021 to 59% just four months later, in April 2022. Since then, it has remained consistently at this elevated level, varying between 56% and 65%. 

You can access our complete library of data to understand the challenges facing consumers from our consumer data hub.

Consumer confidence remains very low

Although pressure on household finances is high, consumer confidence appears to be recovering somewhat. A fifth of consumers said they think the UK economy will get better over the next 12 months, whilst 54% said they think it will get worse, giving a net confidence in the future economy of -33. Although far more people still feel pessimistic than feel optimistic, this is a significant improvement on the -68 seen six months ago. Confidence in future household finances has also increased in recent months, now sitting at -18 compared to -52 six months ago. Although higher than a few months ago, both measures remain below the levels seen just before the pandemic.

People’s confidence in their current household finances is more positive, despite cost of living pressures, at +25. This is much lower than the high levels recorded during 2021, but it is consistent with pre-pandemic levels.