Financial wellbeing in May 2024

Summary

• Consumers’ confidence in the future UK economy and their future household financial situation continued to rise this month. For the first time since September 2021 more consumers think their household financial situation will be better over the next 12 months than think it will be worse
• Whilst consumers are feeling better about their future household finances and the UK economy, they remained deeply dissatisfied with the direction of the UK (prior to the announcement of the General Election)
• The proportion of households making adjustments to cover essential spending continues to improve
• Consumer worry about energy, fuel and food prices also continue to improve but remain very high. Three in four consumers (76%) said they were worried about the cost of insurance

Consumer confidence improves

Consumers are feeling much more confident in both their future household financial situation and the future UK economy. This month, for the first time since September 2021, slightly more consumers think their household financial situation will be better over the next 12 months than those who think it will be worse (net score of +1).

A similar trend has also occurred for consumers’ confidence in the future UK economy which has increased 15 points over the last two months. Despite this, more consumers still think the UK economy will get worse over the next 12 months (39%) than better (25%), giving a net score of -14. 

Consumer confidence in their current household financial situation has not seen the same level of increases that the future confidence metrics have, currently sitting at +22. Since September 2022, the net score has ranged between +9 and +25, with no consistent trend of improvement observed.

Future household financial confidence reached net positive for first time in 32 months in the month to May 10th 

Consumer satisfaction in the direction of the UK remains extremely low

Despite consumer confidence in the future UK economy recovering substantially over the last 18 months, UK adults remain deeply dissatisfied with the direction of the UK as a whole. Almost two thirds (64%) of consumers are currently dissatisfied with the direction, compared to only 15% who are satisfied, giving a net satisfaction level of -49. This data was collected prior to the announcement of the UK General Election on 4th July 2024.

Satisfaction in the direction of the UK feel throughout 2021 and 2022 and is yet to substantially improve

Financial adjustment shows further signs of recovery

In last month’s consumer finances article we highlighted that the level of households making adjustments to cover essential spending has clearly been on a downward trend since mid-2022, whilst the missed payment rate has yet to show any substantial improvement. This picture continued this month, with the household missed payment rate remaining at the same level as last month (7.2%), whilst the financial adjustment rate fell to 52%.

Starting with the financial adjustment rate - this is the proportion of households 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) - the rate has been fairly consistent over the last four months, hovering between 52% and 54%. This is a consistently lower level than late-2022 and 2023 when the rate typically hit the high 50s.

Over half of households made at least one adjustment to cover essential spending in the last month

Unlike this consistency in the financial adjustments rate, we have observed a lot of volatility in our missed payment rate over the last 8 months. This month is the first month we have not observed substantial changes compared to the previous month, with the rate remaining at 7.2%. While this is significantly lower than some monthly rates we observed throughout 2022 and 2023, it does not show clear, consistent improvement for consumers who are struggling the most to meet their living costs.  

7.2% of households said they had missed a payment in the month to May 10th

Many households continue to make sacrifices in response to high prices

The above insights indicate that, whilst consumers are slowly feeling more optimistic about the future, we are yet to see big improvements in consumers’ current circumstances, with the current consumer confidence level and missed payment rate improving to a much lesser extent. This experience for consumers is also reflected in our consumer worry metric, which shows that the vast majority of consumers remain concerned about high prices, but these high levels are slowly improving:

• 80% of consumers are worried about energy prices (down from the high of 93% in August 2022)
• 78% of consumers are worried about food prices (down from the high of 88% in February 2023)
• 72% of consumers are worried about fuel prices (down from the high of 88% in August 2022)

Whilst consumers' level of concern has fallen over the last year, consumers remain much more worried about these prices than they did pre-pandemic (levels of worry ranged between 60% and 70% throughout 2017-2019).

Energy, food and fuel prices are not alone amongst consumer’s financial worries, three in four (76%) consumers said they are worried about the cost of insurance this month.

Many consumers remain worried about energy, food and fuel prices

Summary

This month’s tracker data has illustrated that, whilst consumers are feeling more confident about the future (UK economy and their household financial situation), many continue to struggle to pay household bills each month or cover essential spending. In addition, the vast majority of consumers remain worried about energy, food and fuel prices, the cost of insurance and dissatisfied with the direction the UK is heading. 

Methodology

The fieldwork was conducted by Yonder on behalf of Which between 10th and 12th May 2024. A sample of 2,091 UK adults were surveyed online and weighted to be nationally representative.