Household finances across the country are weaker than at the same point last year, according to new research from Legal & General.
The firm’s MoneyMood Survey found that an increasing number of homes are “struggling” with income not enough to pay bills, and fewer homes have income that exceeds bills and debts.
The number of households who say they’re “struggling” has risen by just over 340,000 at the end of July 2012 compared to the middle of 2011.
The number of “stable” households, those who say they have some money left after paying bills each month, has fallen by 600,000.
However, the survey also shows that, for those who say they’re struggling, the amount of money they are “short” each month (on average) has halved since the beginning of the year as the positive impact of falling retail prices kicks in.
“The continued economic recession appears to be gradually squeezing household income with more homes struggling to stay out of debt this year,” said Mark Gregory, Legal & General’s executive director for savings.
“However, the good news is that lower inflation and falling costs of utilities, fuel and food since the start of this year has helped the less well off households to cope better with paying bills and debt. For those families who are struggling our latest figures indicate the average shortfall nationwide has halved to £42 per month, compared to an average of £96 in January. Homes in London, the Midlands, Yorkshire and the North West appear to have benefited the most with the biggest reduction in monthly shortfalls compared to the national average. Despite the lower figure for July, London has again recorded the highest monthly shortfall at £99 per month (down from £261 in January).”
Yorkshire and Humberside has produced the biggest reduction in the average monthly shortfall with a drop of over 85%, down to £22 from £161 in January.
West Midlands and London are the next biggest fallers managing to reduce monthly average shortfall by 70% and 60% respectively.
However, East Anglia and the North of England have both seen a slight increase in average shortfall.