Four in 10 adults are struggling financially but one in 10 expect their finances to improve over the next three months, according to research by LV=.
Its quarterly survey of 4,000 UK adults found that 42% of respondents were struggling financially and while more than two thirds of respondents said in the past three months they had seen an increase in their total monthly outgoings (69%) and supermarket spend (68%).
However, around 10% of UK adults said they expected their finances to improve over the next three months – up from 8% in the previous quarter.
The proportion of people who thought their finances would worsen over the next three months also fell from 57% to 46%.
The Wealth and Wellbeing Research Programme covers four key indicies measuring consumer financial confidence and security.
While still largely negative, its latest results were beginning to show some improvements in people’s financial situation or expectations for the coming months.
- Financial outlook: The index measuring financial outlook for the next three months was -36 in December 2022 compared to -49 in September 2022. A negative index means more people think their finance will worsen over the next three months compared to those who think it will improve. The index has improved by +13 indicating fewer people have a negative outlook compared to the previous quarter. Some 46% expect their finances to worsen over the next three months while 10% think it will improve.
- Finances over past three months: The index measuring people’s finances over the past three months was -49 in December 2022. The negative index indicated that more people said their finances have got worse over the past three months than those saying their finances have got better. However, this index was a small improvement compared to September 2022 when the index was -52, indicating finances may be starting to improve for some. Almost six in 10 (58%) said their finances had deteriorated over the past three months while 9% said it had improved.
- Income and outgoings: The index measuring income improved, rising from five to nine, as some workers are experiencing pay rises. However for many this was not enough to offset rising outgoings. The index measuring outgoings rose from 57 to 59. Many more people (69%) said their outgoings had increased compared to decreased (10%).
- Savings index: Savings remains low. The index measuring amount saving was -16 in December 2022 from -17 in September 2022.
- Spending on socialising and at the supermarket: The index measuring spending at the supermarket was 57 in December 2022, compared to 48 in September 2022. A far greater proportion of people (68%) said their supermarket spend had increased compared to those who say it has decreased (12%), while 32% were spending less money on socialising
Clive Bolton, managing director of protection, savings and retirement at LV=, said: “The LV= Wealth and Wellbeing Research Programme has highlighted how millions of people have been squeezed financially over the past 12 months as rising energy bills, interest rates and inflation reduce their spending power.
“Millions of people remain gloomy about their finances and are struggling to make ends meet. However, after 12 months of steady deterioration, several of the indices we track have stabilised or improved compared to the previous quarter.
“For example, this is the first time that our two key indices – measuring financial outlook over the next three months and finances over the previous three months – have begun to improve since autumn 2021.
“It’s too early to say if this is the start of a long-term improvement in people’s finances but if the cost of living and inflation begin to ease, people could begin to feel more optimistic about their finances.”
