Amid the worsening cost of living crisis in the UK, supposedly being driven by sky-high energy bills and inflation, households across the nation are reportedly seeing the sharpest fall in actual cash reserves available for spending in more than eight years.
As per a report published by insurance company, Scottish Widows, elevated living costs during the end of last year led to the biggest decline in cash availability since 2014.
The report also said that people have become more pessimistic regarding their future finances for 2022, as per the latest findings from the firm’s quarterly household finance index.
The index, which essentially measures the overall cognizance of financial wellbeing for households, sank to 40.1 in the final quarter of 2021, becoming the lowest since the second quarter of 2020 when the coronavirus first spread across the world.
In a poll of more than 1,500 individuals, it was found that pressure on disposable income and savings intensified during the final months of 2021, as both were seen declining faster than any time prior through the past 7 years.
Meanwhile, an independent report by the Royal Society for Arts stated that young adults were among those hit hardest by the cost of living crisis, warning that the damage to their finances risked the creation of a new ‘generation precariat’.
The thinktank had surveyed 1,000 young adults and found that around 47% of them were unable to make ends meet on a monthly basis, or had an income that fluctuated substantially from paycheck to paycheck.
With inflation having reached an all-time high, UK ministers are facing growing pressures to take action on living standards as a sharp increase in gas and electricity prices is expected for consumers by April.
The legal pay floor for those aged 23 and above will be increased to £9.50 ($12.59) from April. Those in the younger age brackets will also see an increase.
The RSA reported that the government is also contemplating the reduction of repayment threshold on student loans, from £27,295 ($37,208) to £22,000 ($29,990), eliminating a further squeeze on the reducing incomes for graduates.