Financial wellbeing in the July 2023 tracker
Summary
- This months’ tracker survey was defined by a dramatic fall in consumer confidence, alongside a rise in financial difficulty. This indicates that many consumers are continuing to struggle to make ends meet, pay their bills or cover essential spending, and many expect that things will only get worse.
- The proportion of households who had missed a housing, bill, loan or credit card payment was at 8.6% in the month to July 13th.
- Consumers’ level of confidence in the UK economy over the next 12 months dropped 16 points to -47 in the last month.
Financial difficulty rises in late June to early July
The proportion of households who had missed a housing, bill, loan or credit card payment was at 8.6% in the month to July 13th, significantly higher than the 6.9% seen two months prior.
This level of missed payments (8.6%) reflects a return to rates seen earlier this year, where levels ranged between 8.1% (in February) to 8.8% (in March). The lower rates of missed payments seen between April and June this year suggested that financial difficulty may have been improving for those struggling, however this recent month indicates that consumers are still very much struggling with the Cost of Living crisis.
8.6% of households said they had missed a payment in the last month in July 2023
Looking closer at the types of payments missed, the proportion of households that missed;
- a household bill (e.g. water or energy bill) was 5.3%
- a loan or credit card payment was 4.0%
- a housing payment (rent or mortgage) was 2.7%
Water and energy were the most commonly missed household bills. Of those who missed a bill payment, 49% missed a water bill, 48% an energy bill, 38% a phone bill and 34% a council tax payment. As seen last month, many of those struggling with bill payments struggled with multiple household bills. Over six in ten (65%) of those missing a bill payment missed two or more housing bills.
Less severe financial difficulties are being experienced by a much larger swath of consumers. Almost 6 in 10 (59%) 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 shows that the signs of improving household situations for consumers seen back in Spring were short lived.
These insights into current household financial difficulty shows the need for both government and business to think carefully how best to support those currently struggling, and those at risk of serious hardship, through the months and years ahead.
Almost six in ten households made at least one adjustment to cover essential spending in the last month
Consumer confidence falls dramatically
With a higher than expected inflation rate, further interest rate rise reported in late June, and associated removal of some mortgage products from the market, many will find it unsurprising that we have seen a dramatic drop in future consumer confidence.
Consumers’ level of confidence in their future household situation and the UK economy fell, following an upwards trend over the last 10 months. This was most stark for confidence in the UK economy over the next 12 months that dropped 16 points to -47 in the last month (14% of consumers thinking the UK economy will get better and 61% think it will get worse).
Less than a fifth of consumers (17%) said they think their household financial situation will get better over the next 12 months, whilst 37% said they think it will get worse, giving a net confidence of -20. Confidence in their future household financial situation dropped the most for mortgage holders, decreasing from -2 to -23, overtaking outright owners as the most pessimistic group of consumers by tenure.
High inflation rates, even if they stop rising, contribute to an overall sense of economic uncertainty for consumers, erodes purchasing power and leads to pessimism about their future household financial situation.
“I can't see things improving in this country atm. My mortgage will increase again they're predicting and everything else just seems to keep going up and up and up!” Female, 55-64, London
For those looking to remortgage, the fear of mortgage rate increases is playing on people’s minds and is affecting their financial outlook for the future.
“After remortgage I will struggle to pay for my house” Male, 35-44, East Midlands
Consumers are further reporting that their incomes have not seen an increase despite the growing costs to live. This stagnant income exacerbates the affordability crisis, making it harder for individuals to pay their rent and make ends meet.
“Rent, utilities, food and fuel have risen in cost dramatically but my income remains the same.” Male, 25-34, South East
“Inflation is still very high, even if it stops rising it's still double digit. Rent and bills will become unsustainable with my income staying the same.” Female, 25-34, London
Future consumer confidence dropped in the month to July 13th
Consumers’ level of confidence in their current household situation also fell 16 points in the last month to +9 in the month to July 13th (down from +25 in the month to June 9th). Consumers shed light on how their financial struggles have been impacting them personally. Some consumers are frustrated by financial stress which is hindering their ability to enjoy life. Rising living costs make saving difficult and limit their participation in leisure activities.
“I don't feel like I can enjoy anything at the moment. I'm trying to save and it's impossible as everything is getting more expensive” Male, 25-34, Northern Ireland
High costs have forced some consumers to limit their social interactions meaning that they stay at home and avoid socialising. As one consumer describes, this isolation negatively affects their mental well-being and overall quality of life.
“I stay in all the time. I can't afford to go anywhere or do anything and my mental health is extremely poor.” Male, 35-44, Wales
Where some can’t afford to go out, others need to spend more time working to afford the essentials.
“It has an effect on me mentally as well as physically. For example, working long hours without rest and still not being to afford necessities such as bills and certain food.” Female, 18-24, North West
Some consumers worry about providing for their families, with the increasing cost of living making it challenging to maintain a healthy diet and cover essential expenses for the home.
“I struggle to feed my daughter with a healthy diet. We live day to day. If any emergency expenses come up, I’m screwed.” Male, 35-44, South East
These latest tracker survey results saw a sizable increase in financial difficulty and dramatic drop in future consumer confidence. This shows that many consumers are continuing to struggle to make ends meet, pay their bills or cover essential spending. With a sense of hopelessness and a lack of financial confidence for the future, many expect that things will only get worse. However, given better than expected inflation figures for June reported in late July and that some large lenders have since cut mortgage rates, it is not clear whether both these trends will persist or rebound to the levels seen in the Spring.
Methodology
The fieldwork was conducted by Yonder on behalf of Which between 12th and 13th July 2023. A sample of 2,066 consumers was surveyed online and weighted to be nationally representative.