More than a quarter of households earning less than £20,000 are worried they won’t be able to cope with higher bills, with families in Yorkshire, the South West and Northern Ireland least confident about meeting their costs, according to Britain’s latest reconstruction index. 20,000 people from Legal & General. Almost half of UK households are worried about being able to keep up with their rent or mortgage payments over the next 12 months, as the majority realize they will have to make cuts elsewhere. The latest evidence of pressure on households comes amid the looming prospect of inflation hitting 12% this autumn after higher fuel and food costs pushed the official measure of the cost of living to a 40-year high of 9.4% in June. A one-month rise in petrol prices not seen since at least the late 1980s, combined with across-the-board increases in staples such as eggs, milk, cheese and vegetables, sent Britain’s annual inflation rate soaring. Households in Great Britain are bracing for annual energy bills of up to £3,850 next January, three times what they were paying at the start of 2022, after Russia further squeezed Europe’s natural gas supplies. It was recently revealed that a fifth of UK households now have an average shortfall of £60 a week between the income they earn and what they need to cover essentials such as energy bills, rent, transport and food, as the rising cost of living leaves people with the lowest amount of spare cash in almost five years, according to figures from the Asda Income Tracker compiled by the Center for Business and Economic Research. The amount borrowed by UK consumers rose at the fastest pace in three years last month as households struggled to cope with rising living costs. People borrowed an extra £1.8bn in consumer credit last month, up from £900m in May, according to the latest Bank of England figures. The pressure on households is expected to increase this autumn as the price of essentials – from clothes to food – continues to rise alongside higher energy bills. Shoppers are turning to discount stores, ditching brands for supermarket own-label products and cutting back on luxuries such as subscription services and gambling as they try to stretch their budgets. Nigel Wilson, managing director of Legal & General, said: “Many households across the UK are currently facing very difficult financial choices. For some, these options seem impossible. “However, what is more worrying is that the impact of the cost of living crisis is becoming more severe in some parts of the UK than others. This threatens to widen the existing demographic and geographic disparities that the equalization agenda was designed to address.” Almost two-thirds of respondents said long-term solutions, such as investing in energy-efficient homes and offices, were one of the most attractive answers to tackling the cost-of-living crisis. But it emerged the government has abandoned plans to add another £1bn to the existing £1bn funding for home insulation and other measures to help poorer households reduce energy use under the Energy Corporation Obligation, such as first reported by Bloomberg. Subscribe to the Business Today daily email or follow Guardian Business on Twitter @BusinessDesk Efforts to tackle falling bills for people on low incomes have also been hampered by Brexit and Covid-related delays, which have left around £30m from other funds – including the Carbon Housing Relief Fund – partly unavailable. Cuts in central government investment since 2012 have resulted in the rate of home insulation falling over the past decade, making the energy crisis more acute. Meanwhile, UK petrol prices are the second highest in Europe, according to new figures from breakdown recovery service RAC. According to the survey, drivers in the UK pay an average pump price of £186, up to 20bhp more per liter of petrol than drivers in Spain and France. The UK, meanwhile, ranks 12th for temporary petrol tax cuts, well behind Germany, Italy and the Netherlands. Simon Williams at the RAC said: “This analysis reveals an unpleasant truth for the UK Government – that compared to other European countries, it has done almost the least to support drivers during the current period of record high fuel prices. The result is that the UK is one of the most expensive places to fill up and puts it above other countries that have historically charged UK retailers more for fuel, including France and the Netherlands.”
