Households’ financial resilience will be eroded over the coming year as the cost-of-living squeeze tightens, according to economic modelling.
Within a year, the areas of Britain where fewest people have enough money left at the end of the month will include Yorkshire and the Humber (6.7%), the North East of England (7%), Wales (8.1%), the East Midlands (8.7%) and the West Midlands (9.2%), it was suggested.
The figures were released in the Hargreaves Lansdown savings and resilience barometer, produced with Oxford Economics. Researchers used official data for the modelling, including the Wealth and Assets Survey.
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It predicted the percentage of people with sufficient emergency savings will fall from 62% to 57% over the next year. Sufficient savings is defined as having enough to cover at least three months of essential spending, such as rent and energy bills.
The research suggests the percentage of those with enough savings will fall to just 44% in the North East. Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “The regions where people started with less savings and less wiggle room in their budgets will face some impossible challenges.
“In the next 12 months, rising prices will mean huge falls in the proportion of people with enough cash left at the end of the month. “Right now, across the country half of people have enough money left at the end of the month.
“In a year’s time, only London will see as many as one in five people in this position, and in most places it will be closer to one in 10.”
Coles predicts many people who have savings accrued during lockdown may spend their way through them in the coming year. Help is on the way as cost-of-living payments from the government will be made in the coming months to help cushion rising living costs.
From Thursday, a first instalment of £326 will start to be paid out to low-income households on benefits.
The second payment of £324 will follow this autumn.
Pensioner households will receive an extra £300 to help cover the rising cost of energy this winter, while people on disability benefits will receive an extra £150 payment in September.
From October, many households will have a £400 grant to reduce energy bills.
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