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Despite falling unemployment and low interest rates, signs of financial stress on UK households continued to increase at the tail end of 2018, according to the February 2019 Money Statistics, produced by The Money Charity.
As further figures for Q4 2018 arrive, a sobering picture emerges for the UK outlining the challenges which lay ahead in 2019. The average real wage remains 5.9% below the pre-crash peak of February 2008, alongside the average total debt per adult increasing by £935.34 in the year up to December 2018. Added to this, the rate of insolvency and bankruptcy increased from 273 people per day in the third quarter of 2018 to 371 people per day within the final quarter to December.
Other circumstances remain acutely challenging, with the average first-time buyer deposit increasing to 18% of the average purchase price, meaning an average deposit of £31,551 combined with an average loan of £145,702. It would take someone earning the average income 24 years to save the average deposit in a typical Cash ISA offering the average savings rate.
There were also signs of a wider economic slowdown, with the GDP growth rate dropping to 0.2% in the final quarter of 2018, while the inflation rate in January 2019 dipped below the Bank of England’s 2% target for the first time since February 2017.
The Conference Board Leading Economic Index ® for the UK economy fell by 0.5% in December 2018 and by 2.3% in the six months leading up to December, suggesting that the UK economy will slow further within the first quarter of 2019.
Meanwhile, a more positive note can be seen in unemployment declining through to the end of 2018, falling by 274 people per day in the year to December. The 4% unemployment rate is the lowest on record since February 1975.
Michelle Highman, Chief Executive of The Money Charity says:
“While the dawning of a New Year usually gives cause for hope and optimism for the year ahead and a fresh start, the continued decline throughout 2018 of multiple measures leaves 2019 with a lot of hard work to be done before a brighter picture emerges.
“With wages low, prices increasing, wider indicators of further economic slowdown, and more people tipping over the financial edge, the need for positive, proactive actions which will free people up into managing their money well becomes ever more pressing.”
Other key points from the February Money Statistics:
- It costs an average of £22.95 per day for a couple to raise a child from birth to the age of 18.
- The average credit card interest rate in December 2018 was 18.66%.
- On average, a UK household spends £3.97 a day on water, electricity and gas.
Get the full picture and many more fascinating facts about money in the UK in our monthly Money Statistics.
Notes to Editors
- The Money Charity is the UK’s financial capability charity. We believe that being on top of your money means you are more in control of your life, your finances and your debts, reducing stress and hardship, and that being on top of your money increases your wellbeing, helps you achieve your goals and live a happier more positive life as a result. Our vision is for everyone to be on top of their money as a part of everyday life. We empower people across the UK to build the skills, knowledge, attitudes and behaviours, to make the most of their money throughout their lives. Find out more at https://themoneycharity.org.uk/
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