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Middle Britain’s mounting debt hits confidence and ability to save

27 September 2017 | Press Release


  • Six in ten (59%) families fall short of financial resilience recommendations
  • Just one in 20 have some form of financial protection against loss of income
  • Over a third (36%) are not confident they could handle a financial crisis

Mounting debt is causing six in ten (59%) ‘Middle Britain’ families to fall short of the recommended level of savings to be financially resilient – leaving them at risk of being hit hard if they were to lose their income, according to new research by leading insurer, LV=.

In the final instalment of its ‘Income Roulette’ report – a study [1] of debt, savings and protection among 9,000 people – LV= reveals the financial reality of being part of the ‘squeezed middle’. While many might expect this group to be financially secure, with a comfortable household income, the research found this is not the case. Three quarters (75%) of ‘Middle Britain’ - people who are married or in civil partnerships, have one or two children and an average gross household income (£35,000) – struggle to save because of outgoing bills. This is much higher than the national average of 56%.

The situation is leaving many in Middle Britain lacking financial confidence, with 32% 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 (36%) say they are worse off now than they were a year ago.

People in this group are significantly more likely than the national average to have mortgage commitments (63% vs 27%), with the same trend applying to credit card debt (41% vs 26%) and unsecured personal loans (20% vs 9%). They are also much more likely to say that unexpected monthly costs, such as their children, prevent them from saving (54% vs 19%).

These factors mean around three in five (59%) people in Middle Britain fall short of the Money Advice Service’s recommendation to have three months’ worth of outgoings in the bank in order to cope with a financial shock, and therefore be financially resilient. This is compared to the national average of 37%.

The ‘Income Roulette’ research also 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 particularly concerning considering the sheer amount of people who fall under this definition. The Money Advice Service [2] identifies over 12 million people as being in the ‘Squeezed’ group - those who have reasonable income and some savings, but aren’t able to cope with unexpected financial shocks as they don’t have enough in savings and tend to rely on credit.

LV= offers a range of income protection materials and tools for advisers, including the Risk Reality Calculator, to help them in their protection conversations with clients. This simple, client-facing tool can help advisers demonstrate to consumers the chances of them being out of work for a period of time. Advisers can find out more and access the calculator.

Justin Harper, Head of Protection Policy at LV=, said: “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 dependants – 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. With a typical 40 year old couple facing a three in five chance of being unable to work for two months or more [3], this issue could be more real than people think.”

LV= strongly believes the Government needs to do more to help households better cope with financial shocks such as a loss of income. The new Single Financial Guidance Body should have a specific focus on improving the UK’s financial resilience across the board, and in particular among working families. This should include looking at the role of advice and private provision, and considering how Government and industry can increase take-up of both.


Notes to editors:

[1] Methodology for research: YouGov, on behalf of LV=, conducted online interviews with 9,495 UK adults between 5th and 10th July 2017.

[2] The 2016 Money Advice Service research

[3] LV= calculations show a 40 year-old couple – male and, female, non-smokers who want to retire at 65 have a three in five (59%)chance of not being able to work for two months or more in their working lives.

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