Crunch time – we’re borrowing more and missing bills

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More than one in five people are borrowing more than they did this time last year (22%). 8% have had a direct debit, bill or standing order they’ve been unable to pay in the past month.

More than one in 20 are behind on their energy bills, which grows to around one in ten of those aged 16-49 and women. 46% of people find it very or somewhat difficult to pay their energy bills – rising to more than half of those aged 16-49.

Figures published today from the ONS Public opinions and social trends, Great Britain: household finances – Office for National Statistics

Sarah Coles senior personal finance analyst, Hargreaves Lansdown said: “It’s crunch time for the cost-of-living crisis. After a year of shopping around and cutting back, there’s no fat left to trim from our spending, so we’re running into a brick wall financially. Many of those who can still borrow are going further into the red, while others have started missing bills.

“Almost one in ten people (8%) have had a direct debit, bill or standing order they’ve been unable to pay in the past month, which rises to one in ten (10%) of those aged 16-29, and an alarming 13% of those aged 30-49. People in their 30s and 40s often have their finances stretched to the maximum even in the best of times, as often they’re juggling all the demands of young families and buying a property.

“Almost half of us are finding it very or somewhat difficult to pay energy bills (46%) – rising to more than half of those aged 16-49 (54% among those aged 16-29 and 52% among 30-49-year-olds). Increasingly this is tipping over into an inability to pay – which has risen to 6% overall – the highest it has been since mid-July last year.

“Rising prices have hit younger people harder, with one in ten (10%) of those aged 16-29 behind on energy bills. This is no surprise, as younger people tend to be on lower incomes, and spend a higher proportion of their income on the basics. The HL Savings & Resilience Barometer found that the inflation rate for the essentials is running at twice the pace of non-essentials, so these price rises are a major blow for younger people.

“Women are also struggling with these costs, and 8% now say they are behind on energy bills – the highest number since the ONS started asking the question in March last year. Women are paying for the fact they tend to be on lower incomes than men on average.

“Those who still have the ability to borrow more are often opting for this approach rather than falling behind on bills, so the number of people who are borrowing more than they did a year earlier is also trending up. In the two months to 8 January, the number of people who have borrowed more in the previous year averaged 22%. This is the highest the rolling average has been since the ONS started measuring it in November 2021. And while borrowing feels like a solution in the short-term, once you run out of capacity, you’ll face all the same challenges – plus a mountain of debt hanging over you too.”