Millions of people in the UK are still struggling to pay their bills. Here's why
Millions are struggling to pay their bills (Picture: Getty Images)
There are nearly 7.5 million people in the UK who are struggling to pay their bills due to the cost of living, a new survey found.
One in nine adults said they had missed a bill in the last six months, while a massive 14.6 million people are ‘not coping financially or finding it difficult to cope’.
Inflation – the rate at which prices rise – has slowed down in recent months, meaning costs aren’t skyrocketing as much as they were last year.
But despite this, prices for essentials like food and energy bills are significantly higher than just a couple of years ago.
The survey for the Financial Conduct Authority (FCA) spoke to 3,450 adults and the results were used to make projections for the whole population.
Sheldon Mills from the FCA said: ‘Our research shows many people are still struggling with their bills, though it is encouraging to see some benefitting from the help that’s available.
‘If you’re worried about keeping up with payments, reach out to your lender straight away. They have a range of support options and will work with you to agree the best one for you.’
So why are so many Brits struggling to pay their bills?
The results of this year’s FCA cost of living survey found that 7.4 million people felt ‘heavily burdened’ by their bills or credit payments in the six months to January 2024.
This figure is down from the 10.9 million struggling in January 2023, but much higher than the 5.8 million in February 2020 – before the current cost of living crisis began.
Some 5.5 million people said they had fallen behind or missed one or more payments in the last six months, down from 6.6 million a year earlier.
A huge 5.9 million people also said they have no disposable income at all, while the FCA says about half of adults have cut back or delayed spending on eating out at restaurants, buying new clothes, and slashed their budget for food shopping.
High inflation and increasing costs are the main drivers behind the financial struggles people are facing.
The ongoing war in Ukraine was part of the reason energy bills shot up, after Britain banned the import of Russian oil which therefore caused demand – and prices – elsewhere to shoot up.
Ukraine’s grain corridor in the Black Sea is reaching the capacity it had before the full-scale Russian invasion (Picture: Ukrinform/NurPhoto via Getty Images)
Food costs were also impacted by the Russian war in Ukraine, as the Kremlin stopped giving grain-carrying cargo ships safe passage.
Before this, Ukraine was the world’s seventh largest exporter of wheat, fourth largest exporter of barley, and the biggest exporter of sunflower seeds – used to make sunflower oil and animal feeds.
These exports are key ingredients to several basic cupboard staples, forcing their prices up – but thankfully, as the grain corridor has reopened, prices are starting to drop again.
Plus, while the cost of living has increased in recent years, wages have not managed to keep up.
Wage growth has recently started to outstrip inflation – in the three months to January average earnings (excluding bonuses) grew by 6.1%, more than the 4% rate of inflation.
But before this, there was an almost two-year period where inflation was consistently higher than wage increases – reducing the real-terms value of workers’ pay packets.
And it’s currently more expensive to borrow money, as interest rates were increased to their highest level in 16 years.
All this to say: there are lots of reasons why so many Brits are struggling financially at the moment.
As we approach a general election, there’ll be even more scrutiny than usual on political manifestos to see which party’s promises of financial stability for working class people are the most convincing.
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