Over 2m households have missed or defaulted on a bill in the last month

An estimated 2.1 million households missed or defaulted on at least one mortgage, rent, loan, credit card or bill in the last month according to new research from consumer group Which?

This marks the sixth month this year that an estimated 2 million or more households have missed a payment.

Although those on lower incomes are most severely affected by the rising cost of living, Which?’s research shows that consumers across all ages, regions and income bands are feeling the effects.

The majority of consumers across all income groups said they had made an adjustment to cover essential spending in the last month. This was most common among consumers in households surveyed with an income of up to £21,000 (64%) but more than half (57%) of consumers surveyed with a household income of over £55,000 had made at least one adjustment.

The survey also found that consumer confidence in the economy has plunged to its lowest point since the start of the pandemic. The consumer group found only 8% of consumers felt the UK economy would improve over the next 12 months. This compared with 78% who thought it would worsen, resulting in a net confidence of -70 compared to -47 in May. Confidence in future household finances also dropped to the same level as in March 2020 with six in ten people saying their household had been forced to either cut back on essentials or dip into savings, to cover spiralling costs in the past month.

Confidence in future household finances also dropped to -40 in June compared to -28 in May. This -40 level of confidence matches the lowest point of the pandemic in March 2020.

Which?’s tracker also shows that financial difficulty has stayed at consistently high levels. Six in 10 (58%) consumers said their household has had to make an adjustment – such as cutting back on essentials or dipping into savings – to cover essential spending in the last month. This is similar to the 57 per cent observed in May and 59 per cent in April and a significant hike on the 40 per cent seen just a year ago.

Which? says with winter fast-approaching – a time when budgets are stretched even further by increased energy usage, the government and businesses must act quickly to support the most financially vulnerable as prices keep rising.

The recent series of one-off payments announced by the government to help with the energy price cap increase in October will bring relief to many but their success will be judged on whether they continue to reach the most financially vulnerable.

Businesses must do more to support those struggling to make ends meet. For example, broadband companies should promote discounted tariffs to those who are eligible and energy companies must be ready to help customers when the new price cap is announced and takes effect, including offering payment plans for those who need them.

Ofgem must also move quickly on its pledge to take tough action against energy suppliers that are charging people too much for direct debits – and send a clear message that this behaviour from businesses is totally unacceptable.

Rocio Concha, Which? Director of Policy and Advocacy, said “Our research shows that a relentless cost of living crisis is continuing to put huge pressure on household finances – with consumer confidence in the economy plummeting to its lowest point since the pandemic.”

“These pressures are especially apparent among the most financially vulnerable – with around two-thirds of those on incomes of £21,000 or lower saying they’ve had to make at least one financial adjustment to cover essentials in the last month.”

“The government and businesses must ensure that targeted support reaches the ever-growing number of consumers struggling to make ends meet.”