A warning has been issued after new research found that a third of UK adults have less than £500 saved in emergency funds.
A survey of 8,000 UK adults by credit management service providers Lowell found that 32 percent had less than £500 avilable for emergencies and were therefore heavily exposed to income shocks.
The survey also found that 46 percent of UK adults saw their financial situation worsen in 2023 and nearly 70 percent do not expect their financial situation to improve in 2024.
This has led to more and more people having to rely on credit to meet daily expenses with average credit use at its highest since the start of the Covid-19 pandemic.
The survey, which includes results until the end of Q4, also found that 59.2 percent of UK adults have less than £5,000 in emergency savings and 13 percent have none at all.
This lack of savings has led to the average average credit use growing to 53 percent, including a 2.8 percent increase over the last six months of 2023.
Of the people surveyed 33 percent expected their financial situation to get even worse in 2024 and 35 percent expect no substantial change.
John Pears, chief executive of Lowell’s UK, said: “The last 12 months have been a challenging time for many families. High inflation and high interest rates have forced families to make difficult choices just to keep their heads above the water, and our latest data shows just how worrying an impact this is having.
“The erosion of financial health not only impacts the immediate wellbeing of families, but also jeopardises the UK’s long-term financial resilience.
“While inflation is coming down and rates are holding steady, the benefits aren’t yet being felt on the ground. The Government needs to make sure that support for these families continues, even if headline numbers are coming down.”
