Where the cost-of-living crisis is hitting hardest

Right now, across the UK, only half of people have enough money left at the end of the month. In 12 months’ time, in most areas this will fall to around one in ten. Every single part of the country will see at least a 30 percentage point drop.

In a year’s time, the areas where fewest people have enough money left at the end of the month will be Yorkshire and the Humber (6.7%), the North East (7%), Wales (8.1%), the East Midlands (8.7%) and the West Midlands (9.2%).

Over the next 12 months, the percentage of people with enough emergency savings will drop from 62% to 57%. In the North East, the percentage with enough savings will fall more than anywhere else to the lowest level in the country (down 7 percentage points to 44%).

Figures from the HL Savings & Resilience Barometer, produced with Oxford Economics and released in July 2022.

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown said: “Runaway price rises are set to trample our financial resilience in every corner of the UK, but some areas will be hit far harder than others. And 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 ten.

In a year’s time, the areas where fewest people will have enough money left at the end of the month will be Yorkshire and the Humber, the North East, Wales, the East Midlands and the West Midlands. The numbers involved are staggering, and all five of these areas will see fewer than one in ten people reach the end of a typical month with enough cash left over to meet the threshold.

To make matters worse, four in five of these areas already have the lowest proportion of people with enough savings, so they’re less likely to have anything to fall back on and more likely to either have to make painful spending decisions or turn to borrowing. Those who do have some lockdown savings left, may well spend their way through them. Four in five of the areas with the least spare cash will see the proportion with emergency savings to cover at least three months of essential expenses fall the most over the next 12 months.

And it’s not just those areas where more people are already struggling where price rises will take a toll. Londoners will take the biggest hit to their surplus income: the number who meet the threshold for resilience will fall 47.3 percentage points to 21.1%. So despite remaining the most resilient area by this measure, clearly an awful lot of people who have been relatively untouched by the crisis so far will start to feel the squeeze.”