North East hit hardest by the cost-of-living crisis

The cost-of-living crisis has hit hardest in the North East, where savings are lowest and set to fall the most this year according to new research by Hargreaves Lansdown.

The research found that in the North East few people have enough cash at the end of the month, and they have the lowest wages in the country.

Also hit hard by the cost of living is Yorkshire and The Humber, where savings are comparatively low and the proportion of people with enough cash left at the end of the month to be resilient is set to fall lower than anywhere else in the UK by the end of the year.

The rising cost of property and mortgage payments have taken a toll in London and the South East. In London, rising costs are set to eat into surplus cash during the year, so the proportion with enough cash left at the end of the month will fall furthest in London by the end of 2023.

Commenting on the figures, Sarah Coles, Head of Personal Finance at Hargreaves Lansdown said “No corner of Great Britain has escaped the horrible squeeze on spending in the past year – and there’s still more pain to come. In some regions, financial resilience has taken a real beating, and while those where average wages are lower are always going to find rising prices harder to cope with, we’re also seeing it take a toll on the areas with the highest wages- in London and the South East.”

“All but three regions will see their savings resilience fall as we go through 2023, and all of them will see the proportion of people with enough cash left at the end of the month drop. Some will do much worse than others, and overall, people in the North East and Yorkshire and The Humber will suffer particularly badly. In the North East everything from lower wages to the smallest savings balances are working against them, while in Yorkshire and The Humber, people are laid low by the fact they spend so much of their income making ends meet.”

“In other regions, people are hit by the fact they have more expensive houses and bigger mortgages, so remortgaging will cause them real pain now that rates are higher, In addition, some of the areas with large outgoings are suffering from the fact that rising prices are outstripping wages so dramatically. As a result, those areas with the highest wages are also suffering, including London and the South East.”

Runaway inflation has ravaged the amount of money people have left at the end of the month. In Yorkshire and The Humber only around one in five have enough cash at the end of the month to be resilient, and in the North East, and West Midlands only around one in four do. By the end of 2023, inflation will have taken a horrible toll. The proportion with enough surplus cash to be resilient will drop in every region. It will be around or below one in five in eight out of eleven regions, but will fall furthest in London the South East, the South West and Scotland.

Coles continued “Homeowners have been hit with the double whammy of massive house price hikes and rising mortgage rates. Some are still enjoying the protection of rates that were fixed before the rises began, but over time more and more people will be exposed to higher mortgage payments, making a real dent in their financial resilience.”

“Mortgages tend to be a bigger problem for those in areas with higher house prices, which is why London, the South East and the East of England face the most expensive mortgages. In many cases, the regions with higher mortgages tend to be those with larger average wages, but for those who had stretched themselves to buy eye-wateringly expensive properties, a rate rise could be catastrophic for their financial resilience.”

“We also see some outliers – including the East Midlands, West Midlands and Scotland, which come lower down the table for wages than they do for mortgages. In these areas, mortgages are already likely to be more difficult to cover, which doesn’t bode well for anyone having to remortgage onto a higher rate.”