One in eight UK households would run out of money within a week if their main source of income stopped, according to new research from Novuna Personal Finance, as food, energy and everyday bills continue to stretch family budgets.
The first wave of Novuna's new Consumer Confidence Tracker found that 13% of households could only cover essential costs for less than a week if their main income stopped tomorrow, with nearly half, 49%, said they would struggle beyond two months. Theresa Lindsay, Chief Marketing Officer at Novuna, said: "These figures show how close to the edge many families are living.
“One in eight households would run out of money within a week if their income stopped, while half could not last two months. Global food and energy pressures are once again hitting families in the pocket, with essential bills swallowing up more of household income before many people have any chance to save. While the Government has announced measures aimed at easing the squeeze, the jury is still out on whether they will make a meaningful difference quickly enough for families already struggling with food, energy and everyday bills. The fact that a third of consumers are regularly using credit to pay for essentials is a warning sign.
“When borrowing becomes part of paying for groceries, energy or day-to-day costs, it shows just how stretched household finances have become." Novuna's research suggests many households have little room to absorb even a short-term income shock. Food and grocery costs are the biggest source of financial worry, with 18% of households saying they are keeping them awake at night, followed closely by energy bills and council tax or other household bills.
Regional differences are also clear with a North/South divide emerging. Households in Northern Ireland appear the most financially exposed, with 68% saying they could not cover essentials for more than two months, followed by the North East and the North West. By contrast, households in Greater London, the South West, the East Midlands, 45%, and the East of England are below the UK average for financial fragility.
The research also points to a lack of meaningful financial safety nets. While 27% of households say they would rely on savings if their income stopped, many would need outside support, including benefits or income support, 15%, help from family and friends, 12%, or credit, 10%. Credit is already becoming part of everyday financial management for many consumers, with one in three, 33%, saying they regularly rely on credit to pay for essential living costs.
Looking ahead, confidence remains fragile. More than a quarter of consumers, 27%, expect their financial situation to worsen over the next three months. Households in Northern Ireland and the West Midlands are the most pessimistic, at 34%, followed by Wales, 32%.
Despite the pressure, many households are still trying to protect small elements of normal life. Holidays and travel top the list of expected discretionary spending over the next three months, at 28%, followed by eating out and socialising, 23%, and home improvements, 22%.
