Financial problems affect nearly 2 in 5 households

As many as 12 per cent of households are finding it difficult to manage financially, and a further 27 per cent are 'just about getting by', according to the first in a series of five annual reports on financial inclusion from Birmingham University researchers.

Key findings

  • In 2010-11, 39 per cent of households were finding it difficult to manage financially or ‘just about getting by’. This is substantially higher than in the early 2000s, when the comparable figure was 28 per cent.
  • At least half of those in the bottom 30 per cent of the income distribution were finding it difficult to manage financially, or were just about getting by, in 2010-11.
  • Fewer people are without access to any kind of bank account in their household than ever before. From 2009-10 to 2010-11, the number without access to any account in their household fell by around 100,000, from 870,000 to 770,000. Nonetheless, 2 million individual adults did not have an account in their own name.
  • The economic crisis and subsequent squeeze on incomes mean that some people have very little capacity to meet unexpected expenses, even relatively small ones. One in five people would have to borrow money if they needed £200 at short notice. A further one in five either said they would not be able to meet this expense or preferred not to answer the question.
  • Most people are cutting back on their spending, and unsecured borrowing is rising sharply.

The authors conclude: 'This is the longest and deepest slump in a century and we are already seeing signs, in the available data, of a major impact on people’s finances. But the most relevant datasets in this field only provide data up to 2010-11 and so the impact of the recession in 2013 may be even greater. Furthermore, the situation looks set to worsen still further in coming years due to recent welfare reforms. Unless there is a major improvement in the economy and/or government action to support those struggling to make ends meet, we will see further reductions in financial wellbeing and inclusion in future years'.

Source
: Karen Rowlingson and Stephen McKay, Financial Inclusion Annual Monitoring Report 2013, College of Social Sciences, University of Birmingham
LinksReport | Birmingham University press release

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Publication date: 
Jul 25 2013