Financial wellbeing in January 2023

Summary

• The proportion of households who had missed a housing, bill, loan or credit card payment in the last month was at 8.2% in January. 
• The proportion who had made an adjustment to cover essential spending was 59% compared to 49% last January, with the increase driven by more households cutting back on essentials.
• Consumer confidence increased slightly in the new year but remains low compared to levels seen in 2021.

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Financial difficulty levels remain high

The proportion of households who had missed a housing, bill, loan or credit card payment in the last month was at 8.2% in January. This is an increase from the 6.7% who reported having missed a payment in December. Missed payments do typically peak in January, and the rate this year is in line with the last two years. 

5.4% of households had missed some kind of household bill, with the most common being energy bills (2.5%), council tax (2.2%) and phone bills (2.1%).

Six in ten (59%) households reported having made at least one adjustment to cover essential spending such as utility bills, housing costs, groceries, school supplies and medicines in the last month. Adjustments include cutting back on essentials, dipping into savings, selling possessions or borrowing. This is significantly higher than the 49% seen last January, though financial difficulty was already on the rise then. 

Looking at the types of adjustment underlying this headline figure reveals that the increase in the proportion making adjustments to cover essential spending is largely driven by more households cutting back on essentials. This has increased by 11 percentage points since last January. The proportion dipping into savings has also increased, but only by three percentage points.  What we have not seen is evidence of more households turning to credit to cover essential spending. 

The continued pressure on household finances is causing severe stress and worry for many. Consumers who were struggling with their finances described the impact this was having on them:

"It is stressful, not knowing if I'll have enough money to make it through the month; it is debilitating in that I know one accident or expensive necessary item breaking down will result in me not being able to replace it for months. I just feel very tired of it all" - Male, 44, London

"I find it hard to sleep. I am eating less due to money and worry. My mortgage has risen significantly. I am finding it hard to find money for energy bills. As I live in a rural area I can no longer afford to socialise with friends and family due the cost of fuel. I am feeling more isolated than ever" - Male, 46, Northern Ireland

"I constantly stress and worry about not having enough money to provide for my family. This is having a significant impact on my mental health" - Female, 31, South West

Consumer confidence remains very low

Consumer confidence rose slightly this month. 17% of consumers said they thought the economy would improve over the next 12 months, whilst 60% thought it would worsen, giving a net confidence of -43. This compares to -62 last month. Confidence in future household finances also rose from -35 in December to -23 this month.