A watchdog has warned that nearly eight million individuals are struggling to pay their bills due to rising expenses of living.
The Financial Conduct Authority (FCA) estimates that 7.8 million people in the United Kingdom today consider their monthly expenditures to be a “severe burden,” compared to 5.3 million in 2020.
Energy, food, and fuel prices have risen dramatically over the past six months, due in part to the conflict in Ukraine.
Inflation – the rate at which prices increase – rose to 10.1% last month, a level not seen in forty years.
Nicole from Gainsborough works for a university, but she frequently wraps a shawl around her shoulders when working from home out of worry about her energy costs.
“My wage is decent and I work full-time, but I’m concerned about turning on the heating, using the dryer, or cooking in the oven,” she said.
She has taken steps at home to save expenses, such as installing a smart meter.
The fixed-rate mortgage she shares with her husband will expire in twelve months, and interest rates have climbed dramatically.
Nicole stated, “I have no idea how we will finance it.” “I’m well aware that there are people in a much worse position than us… but we’re in a completely unexpected situation as two hard-working normal people with normal incomes.”
The FCA, which regulates businesses in the United Kingdom, surveyed 19,000 individuals between February and June and discovered:
One in four adults described themselves as financially vulnerable, meaning that if they experienced a financial shock, they would quickly find themselves in financial difficulty.
Approximately 4.2 million individuals missed at least three bill or loan payments in the three months before the poll.
27% of black respondents found it difficult to keep up with their bills, compared to 15% of UK adults as a whole.
Struggling to keep up
Sheldon Mills, executive director of consumer and competition at the FCA, stated that the regulator had urged businesses to assist clients with payment difficulties.
In addition, it reminds individuals to call their energy provider if they are unable to pay their bills, to shop around for the best offer, and to search online for free, expert debt counseling.
The energy price cap, which restricts how much suppliers can charge per unit of energy, increased in October, resulting in a dramatic spike in energy costs.
Since then, the government has regulated unit costs for a minimum of six months to safeguard consumers, but millions are still likely to struggle this winter.
The disruption created by the conflict in Ukraine and the weak pound, which drives up import prices, is also driving up food prices.
In the year leading up to September, food costs in the United Kingdom increased by 14.6%, the largest yearly increase since 1980, with the price of staples such as fruit, milk, cereal, and sugar all increasing.
This is only a preview of what the complete report will contain when it is published next year, but it is noteworthy for several reasons.
First, because it is the largest. The poll was delivered to more than 19,000 randomly selected households, a substantially larger sample size than most organizations employ.
The second reason is that this study was conducted during the spring of this year, before the latest energy price increases and the recent jumps in food and fuel prices. If these many households were already struggling at that point in the year, the situation has likely deteriorated dramatically since then. In comparison to the South East of England, the regulator is particularly concerned about the North of England and Wales, as well as black respondents in comparison to the entire population.
The FCA wishes to emphasize that it is taking action by engaging with Buy Now Pay Later companies and reminding other lenders of their responsibility to protect consumers. However, these actions appear insignificant when compared to the magnitude and severity of the financial issues reported by many respondents in their study.
