Are you “drained and desperate” or “affluent and apathetic”? The UK population is now deeply divided into six new distinct groups based on how people are coping with the cost of living crisis, according to researchers.
The groupings have been assembled based on a survey of 4,000 adults by Which? magazine. It found that one cohort of “almost 8 million people have been left balancing on a financial knife-edge” having been protected so far from the worst of the squeeze on household finances but are now on the brink of serious hardship.
This group, labelled “anxious and at risk”, tend to be from larger households with children at home who have just managed to keep afloat by using credit, said the consumer campaign organisation.
However, unlike the 9.2 million members of the drained and desperate group – who often skip meals and one of whom said “it feels like I’m existing instead of living” – the anxious and at risk are much more likely to have borrowed money to maintain basic living standards than to have cut back on essentials, such as food and energy.
It means that despite falls in grocery price inflation to 14.9% over the four weeks to 9 July, down from 16.5% a month earlier, they are poised to be hit by high interest rates that were this week forecast to remain higher for longer.
Six in 10 of the anxious and at risk group have increased their debt in the last six months – the highest among all groups. They are also more than twice as likely as the rest of the UK population to have used buy-now-pay-later schemes and are most vulnerable to the 13 successive interest rate rises in the UK since December 2021 with the Bank of England base rate now at 5%.
“With interest rates continuing to rise, it’s only a matter of time before they find themselves facing serious hardship,” said Rocio Concha, director of policy and advocacy at Which?. “The government must help those most in need by tightening regulation on buy now, pay later to stop unaffordable lending and ensuring essential businesses are doing everything in their power to ease pressures on household finances.”
The profile of the anxious and at risk group is that they are typically earning £20,000 to £45,000, are aged 18 to 34, have children, work and rent their home.
Half of them said they worry that they or other members of their household aren’t eating healthily enough, have increased anxiety and are getting more distant from their friends.
The next most vulnerable group are labelled “cut off by cutbacks” and have seen their social life “massively impacted”, straining relationships and leaving them feeling more lonely and isolated. Their primary concerns for the future include feeling increasingly isolated from family and friends.
Relatively unaffected by the crisis are the “fretting about the future” cohort. They are often aged over 55 and own their homes outright. They have bought cheaper products but around half say they have enjoyed spending more time at home. The last two groups who are financially comfortable are called “looking out for loved ones” and “affluent and apathetic”. The former are likely to be happy day to day but are concerned about family and friends, while almost half of the latter group – many of whom are retired with a pension and own their homes outright – think “people should stop complaining and just get on with it”.
