British households less likely to cope with financial shocks in 2022

New research reveals a lot of British households will not be able to cope with income shocks this year as a result of the cost of living squeeze. Rising inflation, taxes, falling real wages, and interest rates hikes are set to negatively impact a lot of people as we enter Year 3 of the pandemic. New research by Oxford Economics and Hargreaves Lansdown reveals that Britons’ overall financial resilience rose to 57.7 out of 100 last year.
Already 15 per cent of those on lower incomes have fallen behind on bills or debt repayments, a figure that is four times bigger than the national average. Senior personal finance analyst at Hargreaves Lansdown, Sarah Coles says, “With (energy) bills rocketing and interest on their debt rising, the Big Squeeze could pull them under.” The report states a third of Britons overall do not have access to savings that would cover at least three months’ worth of essential expenditure.
When it comes to the ‘save a penny for a rainy day’ barometer, the average score of employees is 64.6, which is much higher than 48.1 of the self-employed. Meanwhile, 40 per cent of working-age households are on track for an annual pension income of £26,000, and only 22 per cent of self-employed people have saved enough towards retirement.
Even among high-income families, a significant number are not putting aside enough for retirement, considering their time of life. Coles said, “Our barometer revealed that while our overall resilience increased during the pandemic, there was a world of difference in the experiences of those whose outgoings fell, who were able to save, and those who lost income.”
Those on high incomes had the highest resilience score of 69.2 followed by baby boomers at 60.8, while Gen Z along with those on low incomes scored the lowest, both at 47.1.