Millions of people in the UK are struggling to pay their bills, according to the City watchdog, which said a growing proportion of the population is having trouble making ends meet.
A survey by the Financial Conduct Authority (FCA) laid bare the impact of the cost of living crisis, saying about one in four (24%) of adults in the UK were either in financial difficulty or would fall into trouble if they suffered a financial shock.
The FCA found that about 7.8 million people were finding it a heavy burden to keep up with their bills, an increase of about 2.5 million people since 2020, as wage growth failed to keep pace with soaring inflation at 40-year highs, currently at 10.1%.
Meanwhile, 4.2 million people had missed bills or loan payments in the six months before the survey took place, in the four months between February and June.
The financial challenges were concentrated in more deprived areas across the UK, with people in economically challenged regions roughly seven times more likely to be in financial difficulty than their peers. About 12% of people in the north-east and 10% in the north-west were struggling financially, compared with 6% of people in the south-east and south-west.
The statistics were gathered as part of the FCA’s financial lives survey, which polled more than 19,000 people and will be published in full in early 2023.
The government is believed to be considering raising benefits in line with wage growth of 5.5%, rather than inflation, which would put further pressure on already-struggling households.
The Resolution Foundation thinktank has said it would have stark consequences for families, with a single disabled adult on universal credit likely to lose £380, while a working single parent with one child would lose £478 a year. A working couple with three children would lose £978.
Sheldon Mills, a director overseeing consumer and competition issues at the FCA, said: “Our research shows that people up and down the country are struggling to keep up with their bills.
“If you are facing financial difficulty, you do not need to struggle alone. There is free debt advice available, and we have told firms they must work with their customers to solve any problems with payment.”