One-in-ten UK households have “nothing left to cut back”

In addition to this, 13% of respondents feel they would have nothing left to cut back on in the face of future energy prices. Those in lower-income households are the most severely affected, with 28% of those with a household income of less than £20,000 unable to cope with further energy price rises. 

They also found that 49% of households are concerned about being able to keep up with rent or mortgage payments over the next 12 months, while 64% of households with dependent children are concerned about being able to keep up with rent or mortgage payments. 

Alongside this, comparing the latest RBI against the prior year shows that while London, the southeast and the southwest have improved their jobs and propensity score, other areas including the west midlands and Yorkshire have fallen back. 

As such, Legal & General’s chief executive Sir Nigel Wilson has called on the new government to address the root regional inequalities and believes the private sector could play a crucial role by investing in new homes and high wage employment. 

Long-term solutions are needed

When surveyed, 44% of the cost of living respondents welcome further immediate term financial for those most in need. 

However, there was a consensus that long-term solutions - such as investment in energy homes and offices, and the creation of higher wage employment being the most attractive solutions to tackling the cost of living crisis - made up 62% and 54% respectively. 

Geographical differences 

According to the research, only 56% of UK households are confident they will be able to maintain their current lifestyle in 12 months. And, given the RBI continues to flatline, the findings make clear the UK is neither rebuilding or levelling up. 

In addition to this, the cost of living crisis is disproportionately affecting households in areas where there is a greater need for levelling-up initiatives. 

Its report also highlights the impact the cost of living is having at a household level, with only 19% stating they will be able to cope with further energy price increases without having to cut back. 

Alongside this, the increasingly precarious nature of households’ budgets is further evidenced by the fact that 49% of households are feeling very or fairly concerned about being able to keep up with mortgage or rent payments over the coming 12 months. 

More specifically, families are feeling particularly squeezed, with 64% concerned about their ability to cover housing costs. 

Public and private sector collaboration

These findings have led to calls from Legal & General for the new government to deepen its commitment to and urgency in addressing the root causes of local inequalities, by investing in the creation of homes, jobs and green energy sources. 

Wilson says many households across the UK are “facing very tough financial choices”, with these choices seeming “impossible” for some. He added: “However, what is most concerning is that the impact of the cost-of-living crisis is being felt more severely in some parts of the UK than in others. 

“This threatens to widen the existing demographic and geographic inequalities that the levelling-up agenda was designed to address. There are clearly many households in need of immediate financial support, and we should absolutely welcome the financial packages that have been put in place to lessen the immediate impact on those most in need.

“Whilst immediate financial support for households is an important, longer-term strategic action to tackle the root cause of inequalities needs to remain a key focus private capital has a crucial role to play in the UK’s levelling-up journey, and more need to be done to attract this investment, including in energy efficient homes, high wage employment and green energy solutions.”