Financial Wellbeing in January 2025
In this article
- Summary
- Consumers’ confidence has fallen significantly over the past six months, driven predominantly by pensioners
- More than a third of pensioners expect their finances to improve or stay the same, despite expecting a worsening UK economy
- Financial difficulty has fallen
- Working age parents saw the largest decrease in their financial difficulty
- Summary
Summary
- Consumer confidence in the future of the UK economy fell by 9 points to -49 this month. Over the past six months it has declined by 49 points. Confidence in consumers' future household situation remained relatively stable, decreasing by just one point to -15, but over the past six months it has fallen by 15 points.
- Falls in confidence have been largely driven by worsening sentiment among pensioners.
- Confidence in consumer’s current household financial situation increased by 4 points to +23 in the last month.
- Reported levels of financial difficulty fell, particularly among working age parents. Overall, missed payment rates fell to 5.7% and financial adjustment rates decreased to 45%
Consumers’ confidence has fallen significantly over the past six months, driven predominantly by pensioners
Consumer confidence in the future of the UK economy has dropped sharply this month, falling by nine points from -40 to -49. This score represents 62% of consumers believing the economy will worsen, while only 13% expect it to improve.
Confidence in the future economy is now at its lowest point since December 2022, when price inflation was more than 10%, and this month's decline continues a broader six month trend of falling consumer confidence in the future UK economy, which has dropped by 49 points overall, from 0 to -49.
The decline in confidence has been particularly stark among pensioners, whose confidence in the future UK economy dropped by 23 points in the past month, from -53 to -76, and by 68 points over the past six months.
In comparison, working age parents reported a four-point decrease to -38 in the last month and working age non-parents reported a six-point drop to -32. Over six months, these groups have had a 40 point decline and a 47 point decline over the past six months, respectively.
Despite the sharp decline in consumer confidence in the future UK economy, confidence in consumers' future household situation has remained relatively stable to last month, decreasing by just one point to -15. However, over the last six months, confidence in future household finances has seen an overall decline by 15 points from 0 to -15. This decline has also been largely driven by pensioners who experienced a 24 point decrease from -15 to -39 in the last six months.
On the other hand, confidence in consumer’s current household financial situation has increased by 4 points to +23, in the last month, decreasing by only six points in the last six months.
Confidence in the future UK economy declines to -49, whilst pensioners' confidence declines to -76
Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave.
More than a third of pensioners expect their finances to improve or stay the same, despite expecting a worsening UK economy
Over the past six months, a noticeable gap has developed between consumers' confidence in the future of the UK economy and their expectations for their household finances. As a result, a significant portion of consumers believe the economy will worsen but expect their future household finances to improve or remain stable. This month, more than a quarter (28%) of consumers reported holding this view.
Looking at the demographics of these consumers, pensioners are more likely to hold this view compared to their working-age counterparts. Over a third (36%) of pensioners believe their future household finances will stay the same or improve while the future UK economy will worsen, compared to 27% of working-age non-parents and 28% of working-age parents.
Financial difficulty has fallen
Consistent with the small uptick in confidence in current household finances, people reported lower levels of financial difficulties in the past month. The proportion of households missing a household bill, loan or credit card payment, mortgage payment or rent bill in the month to January 8th dropped by 2.2 percentage points to 5.7%. This returned the rate to that recorded in both October and November 2024.
Missed payment rates decreased across all payment types, but most substantially for household bills which dropped by 1.9 percentage points to 3.1%, following a sharp increase in December. After three months of rising missed rent payments, the rate fell to 3.5% this month.
Additionally, the proportion of households having to make an adjustment to cover essential spending has decreased by 10 percentage points from more than half (55%) to 45%. Adjustments include cutting back on essentials, dipping into savings, selling possessions or borrowing.
The missed payment rate dropped to 5.7%, and financial adjustment rate dropped to 45%, in the month to January 8th
Source: Which? Consumer Insight Tracker: Approximately 2,000 respondents per wave. UK level data are weighted to represent the adult population of the UK by age, gender, region, social grade, working status and housing tenure.
Working age parents saw the largest decrease in their financial difficulty
The proportion of working age parents who missed a payment in the last month has decreased significantly by 6.7 percentage points to 7%. This is the lowest rate of missed payment for this group since September 2020 and the second lowest rate ever recorded for this group (since April 2020). In comparison, working age non-parents experienced a 2.2 percentage point decrease to 5.6%.
Whilst their working counterparts experienced a decrease in their missed payment rate, pensioners experienced an increase by 0.9 percentage points to 2.1%. The highest level of missed payment for this group since September 2022.
Additionally, working-age parents recorded a notable drop in their financial adjustment rate. The proportion of parents needing to make at least one adjustment to cover essential spending fell by nineteen percentage points to 49%, matching levels last seen in March 2022. This represents the lowest financial adjustment rate ever recorded for this group.
In comparison, working age non-parents reported a nine point decrease to 47% and pensioners reported a five point decrease to 33%.
Working age parents missed payment rate decreased to 7% and their financial adjustment rate decreased to 49%
Source: Which? Consumer Insight Tracker: Data for demographic groups are unweighted and samples vary between waves. Typical sample sizes per wave range from 520-580 for working age parents, 980-1,050 for working age non-parents and 470-540 for pensioners (based on middle quartiles).
Summary
This month showed a fall in consumer confidence in the future UK economy by 9 points to -49, marking a significant decline of 49 points over the past six months. Meanwhile, consumer confidence in their future household situation remained relatively stable, though it has fallen by 15 points over the last six months. These declines in confidence have been mostly driven by pensioners. On the other hand, consumer confidence in their current household finances have increased to +23.
Following an unexpected rise in financial difficulty in December, this month also saw financial difficulty ease, especially for working age parents. Overall, missed payment rates declined to 5.7% and financial adjustment rates declined to 45%.