Average UK household teetering on breadline
The average family is just two weeks from the breadline according to Legal & General’s latest Deadline to the Breadline report.
Just 14 days after losing their income, the average working age family would be reliant upon state benefits and friends and family alone for financial support. With over 65s included, the overall average deadline is still only 29 days. The survey also found that overestimate the amount of time they could get by on their savings, believing they could last 77 days.
This ‘Deadline to the Breadline’ has increased by three days since the last report – from 26 to 29 days, largely due to increased saving levels among 18-24 year olds. However, rock-bottom interest rates and falling real incomes have meant that households are saving £8.12 less per month on average in 2014 compared with last year. Over a third (35 per cent) of the population have no money saved at all.
In a sign of the UK’s increasing dependence on low interest rates, the report found that a 2 per cent increase in mortgage interest rates would move the typical household with a mortgage one day closer to the breadline. Even a 1 per cent rise would mean households would no longer be able to save each month and would have to change their spending habits, or rely on existing savings, to make ends meet.
Households in Greater London have the longest average deadline (83 days) and savings levels continue to increase. In Wales, the region with the shortest deadline, savings levels have decreased and now stand at just £238.
The over 65’s continue to lead the way when it comes to saving. This age group has a deadline of over one year – 379 days – compared to just 7 days for beleaguered 45-54 year olds.
Mark Holweger, managing director (Intermediated), Legal & General Assurance Society said: “While it’s heartening to see an improvement in the financial situation of UK households, this fourth edition of our Deadline to the Breadline report exposes the harsh reality that many households are on the brink and just weeks away from becoming reliant upon family, friends or the state. Despite improvements in the employment market, the average working age family is just two weeks away from the breadline.”
“With new economic headwinds approaching and an interest rate rise on the horizon, now is not the time to be burying our heads in the sand. Talk of the economic recovery and an increase in consumer confidence could lead many people to revert back to their old habits when now really is the time to think about protecting their future.”
Cherry Reynard is acting editor of YourMoney.com