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'Middle Britain's' financial confidence crisis

12 November 2018

Mounting debt is causing six in ten (59%) 'Middle Britain' families say they would fall short of financial resilience recommendations - leaving them at risk of being hit hard if they were to lose their income, according to research by LV=.

  1. Research reveals the financial reality of being part of 'Middle Britain'.
  2. Six in ten (59%) families consider they would fall short of financial resilience recommendations.
  3. Over a third (37%) not confident they could handle a financial crisis.
6/10 Middle Britain families falling short of financial resilience recommendations

In the final instalment of our 2017 ‘Income Roulette’ report – a study [1] of debt, savings and protection among 9,000 people – we reveal the financial reality of being part of the ‘squeezed middle’.

Our earlier instalments revealed that late-millennial renter are one of the least financially resilient groups in the UK and how the self employed are vulnerable to financial shocks.

Now, we can reveal that among people aged 24 top 60 who are married or in civil partnerships, have one or two children and an average gross household income between £25,000 and £45,000, three quarters (75%) struggle to save because of outgoing bills – much higher than the national average of 56%.

Life in 'Middle Britain'

While many might expect this group to be financially secure, with a comfortable household income, the research found this is not the case. The situation is leaving many in ‘Middle Britain’ lacking financial confidence, with 37% not confident they could handle a financial crisis, and 44% worried they’ll never be able to save for a rainy day. Meanwhile, over a third (35%) say they are no better off now than they were a year ago.

People in this group are significantly more likely to have credit card debt than the national average (41% vs 26%), with the same trend applying to unsecured personal loans (20% vs 9%) and unexpected monthly costs including home improvements (49% vs 28%).

5% of Middle Britain families have income protection insurance

These factors mean around three in five (59%) people in Middle Britain say they would fall short of the Money Advice Service’s recommendation to have three months’ worth of outgoings in the bank in order to be financially resilient. The national average is 37%.

Finding financial confidence

Using our new Risk Calculator, the results show that together a 35 year-old, female, non-smoker who wants to retire at 68 and a 40 year-old, male, non-smoker also wishing to retire at 68 have a 70% chance of not being able to work for two months or more in their working life and a on in three (33%) chance of suffering a serious illness.

An example of how our calculator breaks down the risks...

illustration of the risk calculator results

What’s next?

The ‘Income Roulette’ research shows just 5% of Middle Britain families have income protection insurance, leaving them financially vulnerable if they were unable to work because of accident, sickness or disability. This is a particular worry given the lack of confidence many would have in a financial crisis.

In theory, you’d assume families on average earnings or above would feel relatively financially secure, but our research reveals this is far from the truth. At a time when wage increases are failing to keep up with price increases, household incomes are stretched more than ever before, and families – with responsibilities like mortgage payments and dependents – are struggling as much as ever to make ends meet. It shouldn’t be that way. Income protection products can provide a valuable financial safety net but too few of us have it. We’re calling on the Government to help households better cope with financial shocks such as a loss of income, by tasking the new Single Financial Guidance Body with improving the UK’s financial resilience across the board, and in particular among working families. With a typical 40 year old facing a two in five chance of being unable to work for two months or more, this issue could be more real than people think.

Justin Harper, Head of Protection Policy at LV=
Photograph of Justin Harper, Head of Protection Policy at LV=

[1] Methodology for research: YouGov, on behalf of LV=, conducted online interviews with 9,495 UK adults between 5th and 10th July 2017. Data has been weighted to reflect a nationally representative audience. Among the research there were 676 respondents who are self-employed.

Of those surveyed, 'Middle Britain' has been identified by categorising the audience segment to: those aged between 24 & 60, either married or in a civil partnership, with 1 or 2 children, with gross household income between £25,000 and 45,000 per year. This works out at 244 of the 9,458 surveyed.

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Liverpool Victoria Financial Services Limited, registered in England with registration number 12383237. County Gates, Bournemouth, BH1 2NF, UK