INSIGHTS ¦ Financial Vulnerability Index – Update


Summary

The Financial Vulnerability Index (FVI) report for Q4 2023 presents an in-depth analysis of financial vulnerability across the UK, highlighting increased financial pressures since the pandemic, with particular emphasis on the cost-of-living crisis, housing costs, and employment status as key factors influencing financial vulnerability.

Key Points

  • The FVI score increased to 44.2 in Q4 2023, indicating heightened financial vulnerability.
  • Financial vulnerability has remained higher post-pandemic due to the ongoing cost-of-living crisis.
  • Credit usage reached 53.0%, the highest since the Covid-19 pandemic began.
  • The percentage of benefits claimants stabilised at 8.5%, though higher than pre-pandemic levels.
  • A significant 59.2% of UK adults lack sufficient emergency savings.
  • Housing costs and type are major factors driving financial vulnerability, especially among private renters.
  • Employment status, particularly lack of work or underemployment, significantly contributes to financial vulnerability.
  • The FVI methodology was updated to better reflect the changing nature of financial vulnerability.
  • Regional analysis shows the North East as the most financially vulnerable area, with the South East being the least.
  • Specific constituencies in the West Midlands metropolitan area, such as Birmingham Hodge Hill, show very high levels of vulnerability.
  • Financial vulnerability is not uniform across the UK, with significant regional variations.

Key Statistics

  • FVI score for Q4 2023: 44.2.
  • Credit usage at 53.0% in Q4 2023.
  • 15.2% of UK adults in default in Q4 2023.
  • Benefits claimants at 8.5% in Q4 2023.
  • 59.2% of UK adults without sufficient emergency savings in Q4 2023.
  • 10.2% use of alternative financial products in Q4 2023.

Key Take Aways

  • Financial vulnerability remains elevated across the UK, with notable increases since the pandemic.
  • Housing costs significantly influence financial vulnerability, particularly for private renters and those in high-cost areas.
  • Lack of stable employment exacerbates financial vulnerability.
  • Regional disparities in financial vulnerability highlight the need for targeted policy interventions.
  • The updated FVI methodology enhances the index’s relevance and accuracy in measuring financial vulnerability.
  • Policymakers and stakeholders can use the FVI to better understand and address financial vulnerability at the national, regional, and constituency levels.
  • The cost-of-living crisis continues to impact financial well-being, necessitating ongoing support for those affected.
  • Savings levels are critically low for a significant portion of the population, underlining the importance of financial resilience strategies.
  • The relationship between financial vulnerability and housing indicates the need for affordable housing solutions.
  • Employment support and access to quality jobs are crucial in reducing financial vulnerability.
  • The report underscores the importance of continuous monitoring and analysis of financial vulnerability to inform effective policy and support measures.
  • Stakeholders are encouraged to utilise the FVI’s insights for targeted interventions to improve financial resilience across the UK.
See also  [INSIGHTS]: Consumer Duty – The First Three Months
RO-AR insider newsletter

Receive notifications of new RO-AR content notifications: Also subscribe here - unsubscribe anytime