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Higher proportion of people ‘struggling at the bottom’

A higher proportion of people are struggling financially at both the bottom and middle income ranges, and the majority fear that Brexit will make their economic situation worse.

These are the findings in the final annual monitoring report on financial inclusion, published by Birmingham Business School and funded by Friends Provident Foundation.

For the last five years the reports have monitored financial inclusion in Britain through a range of measures, including access to bank accounts, data on savings and use of food banks.

There are some positive signs since last year’s report, with unemployment down and some groups having reduced their debts. But real wages continue to fall and incomes are being further squeezed, the report says, particularly at the bottom of the income range – as the benefit cap and a spike in prices take their toll. Thus some people are struggling more now to meet expenses and avoid debt.

Progress has also stalled in the last few years on reducing the numbers of the ‘unbanked’ people – and for those who borrow money the amount in increasing.

The data shows that overall people were less able in 2017 to be able to find money for one-off expenses than they had been in 2013. When asked whether or not they could find £200 at short notice, 11% said that they would not be able to meet this expense compared to 6% in 2013.

Only quarter said that they would be able to find that amount without cutting back on essentials, a dramatic drop from 39% in 2016.

In June this year, the government introduced the new role of parliamentary under-secretary of state for pensions and financial inclusion, a move that the authors of the report hope will see the start of a renewed focus on financial inclusion. A House of Lords select committee report on financial exclusion has set out a policy roadmap for reducing levels of exclusion.

While the authors say it is difficult to provide robust figures for how financial inclusion has changed over the last five years, they say that it is clear that a higher proportion of people are ‘struggling at the bottom and being squeezed in the middle’. Those at the top appear to have improved their positions over the last five years, the report says.

  • Read the report here

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