The Financial Conduct Authority (FCA) has found 31.9mn people across the UK are struggling to keep up with their bills.
In its latest Financial Lives survey, published today (October 21), the FCA said this was an increase of around 6m people since 2020 and accounted for around 60 per cent of all UK adults.
Of this, 7.8mn people are finding it a heavy burden to keep up with their bills, up from 5.3mn in 2020.
Sheldon Mills, executive director, consumer and competition at the FCA, said: "If you are facing financial difficulty, you don’t need to struggle alone. There is free debt advice available, and we have told firms that they must work with their customers to solve any problems with payment.”
The City watchdog said it has responded quickly to cost of living pressures, in line with its three-year strategy which focuses on three key outcomes: reduce and prevent serious harm, set higher standards and promote competition.
Myron Jobson, senior personal finance analyst at Interactive Investor, said: “It has been a case of out of the frying pan and into the fire for many following the pandemic. Those who manage to weather the Covid financial storm have been buffeted by price rises in seemingly every area of expenditure.
“Now those on a financially precarious footing are facing 40 year high inflation levels – which could etch even higher once the heightened energy price cap which came into effect this month filters through.”
The survey, which was carried out between February and June 2022, found that one in four (24 per cent), or 12.9mn UK adults now have low financial resilience, up more than 2mn on 2020 (10.7mn).
It revealed that some 4.2mn people have missed domestic bills or credit repayments in at least three of the six months before the survey took place. This is up from 3.8mn in 2020.
Jobson added: “The nation’s financial resilience is on a knife-edge. The fact that one in four UK adults are in financial difficulty or could quickly find themselves in difficulty if they suffered a financial shock is desperately worrying.
“With wages failing to keep pace with runaway inflation and the lockdown savings well running dry for many Covid ‘accidental savers’, the number of people struggling to keep up with bills could rise even further in the coming months.”
A ‘sobering’ view
Elsewhere, it revealed that adults living in the most deprived areas of the UK are nearly seven times more likely to be in financial difficulty than those living in the least deprived areas.
More than a quarter (27 per cent) of black people said they found it a heavy burden to keep up with bills, compared with 15 per cent of all UK adults.
Around 12 per cent of people in the North East and 10 per cent in the North West are in financial difficulty, compared with 6 per cent in the South East and South West.