Jump in bill anxiety: UK consumers expect to miss payments in the next 12 months

Surging inflation has created a wave of financial anxiety as households struggle to meet their commitments. Intrum’s annual European Consumer Payment Report (ECPR), a survey of 24,000 consumers across Europe, shows that eight in 10 UK respondents are worried about rising grocery and energy prices.

Two out of every five believe they will not have enough money to pay their utility bills in the next 12 months and a third say they have already missed a bill over the past year.

“Rising interest rates and soaring prices are making UK consumers deeply pessimistic about the future,” said Eddie Nott, Intrum’s Managing Director for the UK and Ireland. “The impact is greater than we experienced during the pandemic, affecting almost all consumers, many of whom have not experienced financial difficulty before. We expect to see increasing levels of default as people find themselves unable to meet their commitments.”

Creditors can expect growing levels of late and non-payments

Seven in 10 UK respondents are changing how they spend money, with a similar number saying they are increasingly aware of unnecessary costs. Consumers who are changing their behaviour are cutting back on meals out, which is bad news for the hospitality sector and others that were starting to regain their footing after the impact of Covid. Younger consumers are feeling the pinch too in their social lives and are more likely to be using buy now, pay later (BNPL) to cover the growing cost. Forty-one per cent of the Gen Z cohort, who are in their late teens and 20s, say they increasingly do this.

Among consumers who expect to miss bill payments in the next 12 months, most say they are likely to default on e-commerce and online store bills. These findings are supported by the latest data from the European Banking Authority (EBA) Dashboard, which shows that the ratio of stage 2 loans has been on the rise, indicating that a greater number of defaults could follow.

Most believe high inflation will last for years, despite government intervention

More than half of UK respondents expect inflation to continue for years, suggesting little faith in their leaders’ ability to bring prices under control. The economic uncertainties are also causing a majority, six in 10 respondents, to worry that they are not saving enough for the future and will not be able to retire comfortably.

One way for consumers to battle the gloomy outlook for their personal finances is to increase household incomes, and three in 10 respondents indicate that they will soon ask for a pay raise. This rises to 44 per cent among respondents with young children.

“The relatively high share saying they will demand a pay increase indicates that consumers’ patience with falling real wages is diminishing. This will add further pressure to government and central banks to take action,” says Nott. “UK consumers face a difficult winter, and many will need to seek help from their creditors.”