Financial wellbeing in May 2023
Summary
- 6.9% of households reported having missed a housing, bill or credit payment in the last month in May, compared to 7.3% in April.
- 55% of households had made an adjustment to cover essential spending in the last month, showing early signs of improvement.
- While consumer confidence for the next 12 months continues to improve, consumers’ outlook on their current household financial situations remains unchanged.
Financial difficulty levels remain high but may be showing early signs of improving
The proportion of households who had missed a housing, bill, loan or credit card payment in the last month was at 6.9% in May, significantly lower than the 8.8% seen in March.
The 6.9% observed this month is in line with the level seen at the same time last year (7.0%), but still higher than in May 2021 (5.7%) and May 2020 (5.3%). This indicates that, while rates of missed payments remain high historically, the downward trend over the last two months may be an early sign of improvement for consumers.
Renters remained much more likely than homeowners to have missed a payment in the last month (12.8% and 4.3% respectively).
More than half (55%) of 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 again is a sign that household’s financial situations may be improving with the lowest level of adjustment to cover essential spending seen since March 2022. That being said, the proportion of households reporting making at least one adjustment remains high by historical standards.
Consumer confidence continues to improve
Consumers’ level of confidence in their future household situation and the UK economy continues to improve following a small blip in April. Despite this, pressure on household finances remains high and confidence in current household financial situations shows little signs of improving.
A fifth of consumers (20%) said they think their household financial situation will get better over the next 12 months, whilst 35% said they think it will get worse, giving a net confidence of -15. Although more people still feel pessimistic than feel optimistic, this is a large increase from the record low of -52 seen in September 2022. Confidence in the UK economy over the next 12 months has also improved significantly since September 2022, increasing 40 points from -68 to -28. This is calculated from there being a fifth of consumers (20%) who said they think the UK economy will get better over the next 12 months and 48% who said they think it will get worse.
However, this recent increase in optimism in their future household situation and the UK economy is not being reflected in how consumers rate their current financial situation. Consumer confidence in current household finances has remained relatively low and stable recently with the net proportion of consumers describing their household financial situation between very good and very poor being at the same level as 6 months ago and has only improved 7 points since September 2022.
This month's insights suggests the financial outlook for consumers may be brightening, but with food inflation still high and interest rates continuing to rise, current household finances remain challenging.
Methodology
The fieldwork was conducted by Yonder on behalf of Which between 10th and 11th May 2023. A sample of 2,076 consumers was surveyed online and weighted to be nationally representative.