Financial wellbeing in July 2024

Summary

• Consumers are feeling more confident about their household finances and the future UK economy. Consumers’ confidence in their future household financial situation and the future UK economy rose in July, both reaching a net score of 0.
• Financial difficulty fell sharply in the month to July 12th, with less than half of households making adjustments to cover essential spending for the first time in two and a half years. This is significantly lower than 2022 and 2023 levels.
• Households with working age parents have seen some of the largest falls in financial difficulty.

Consumers are feeling more confident about their household finances and the future UK economy

Consumer sentiment rose in the week following the general election, with consumers feeling slightly more confident about their household finances and the future UK economy.

Consumers’ confidence in their future household financial situation and the future UK economy rose in July, both reaching a net score of 0. This means that an equal proportion of consumers think these will improve as those who think they will worsen over the next 12 months. For the future UK economy, this increase represents the fifth straight month of improvement.

Consumers' confidence in their current household finances also increased this month to +29. This score reflects almost half of UK adults (47%) rating their current finances as good and 18% rating them poor.

Consumer confidence improves in July

Financial difficulty fell dramatically in July

More than just an improvement in consumer sentiment, household finances also improved in the month to July 12th. This period saw a significant fall (8 percentage points) in the proportion of households making adjustments to cover essential spending such as utility bills, housing costs, groceries, school supplies and medicines. This drop to 42% is the biggest month on month drop we have ever observed and is the lowest level seen since December 2021. Adjustments include cutting back on essentials, dipping into savings, selling possessions or borrowing.

Just over four in 10 households made at least one adjustment to cover essential spending

The proportion of households missing a housing, bill, loan or credit card payment also fell this month, dropping 0.9 percentage points to 5.8%. This is the lowest level since August 2021 and clearly demonstrates a downward trend from the high levels of missed payments seen throughout 2022 to early-2024.

5.8% of households said they had missed a payment in the month to July 12th

Some of the largest improvements in financial difficulty come from households struggling the most

In previous months we have observed some improvements in financial difficulty, predominately in our financial adjustments metric. These previous improvements had mainly been amongst groups struggling the least; those on higher incomes and pensioners, who already had lower rates of financial difficulty. 

In contrast this month, some of the largest falls in financial difficulty this month came from households with working age parents (a group that has always had higher rates of financial difficulty compared to working age non-parents and pensioners). In the month to July 12th, the proportion of working age parent households missing a household bill fell from 13.2% in the previous month to 9.9%, the lowest level in almost three years. This is greater than the fall for working age non-parent households (down 0.9 percentage points) and rise amongst pensioners of 1.5 percentage points. 

This trend was also observed in the proportion of households making adjustments to cover essential spending; there was a 12 percentage point fall for working age parent households (to 53%), 10 percent point fall (to 44%) for working age non-parent households and a 1 percentage point rise (to 28%) amongst pensioners. 

These improved circumstances for households struggling with the cost of living, especially amongst groups struggling the most, are encouraging signs that pressures on household finances are easing.

Missed payments and financial adjustments fall the most amongst working age parents

Summary

This months’ tracker survey shows positive movements for consumers; they are more confident regarding their current and future household finances and their financial situations are better. Despite this, many households are still struggling. Future waves of this tracker survey will indicate whether these improvements persist, continue to improve or are just an outlier.

Methodology

The fieldwork was conducted by Yonder on behalf of Which between 12th and 14th July 2024. A sample of 2,100 UK adults were surveyed online and weighted to be nationally representative.