Over 8 million UK adults financially ‘fragile’

Nearly 9 million UK adults show signs of financial fragility according to research by PwC UK and TotallyMoney.

by | 17 Jan, 2023

In addition, the total amount of unsecured debt now exceeds £400 billion, meaning that an average UK household is set to owe just over £16,000 in unsecured debt

Data also revealed a 50 per cent increase in UK adults who are likely already locked out of mainstream banking services (13.6 million in 2016 versus 20.2 million in 2022) and are therefore ‘under-served’.

The research found that 8.9 million UK adults showed signs of financial fragility that is defined as those who may need to use their overdraft to cover everyday spending such as food shop. They may also struggle to make repayments on their borrowing in the next year.

In addition, fresh analysis by PwC also showed that the total amount of unsecured debt now exceeds £400 billion, which equates to a record high of £16,200 per household.

In the past year alone, unsecured household debt has grown by more than£1,000 or an annual growth rate of 7.2 per cent. This is a steep increase in comparison to 2016 when UK households were set to owe close to £10,000 in unsecured debt by the end of that year, which was, at that time a record high.

The data also showed that over 20 million adults are currently underserved by high-street lenders either due to having a thin credit file/minor adverse credit history, holding a near-prime credit card, or perceiving themselves to be underserved. On average, the underserved population tends to be younger than those who are not underserved (45 versus 51 years old) and typically has a lower gross personal income (£27,000 versus £34,000 per annum).

Isabelle Jenkins, leader of financial services at PwC UK, said the results are startling and it’s clear that for UK households struggling with post -Christmas debt, the outlook may feel challenging.

“For most borrowers, credit performs an important function, smoothing income and expenditure, which, if affordable, can be beneficial. However, unaffordable lending and borrowing can cause real harm to individuals and society, and vulnerable consumers can be disproportionately affected,” she said. 

Simon Westcott, strategy & UK financial services lead at PwC UK, said the rising levels of unsecured debt plus UK household’s vulnerability to interest rises, could leave consumers overstretched.

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