This report discussed creditor communications and financial difficulties. It highlights The Financial Vulnerability Index (FVI), a collaborative creation by Opinium, Lowell, and the Urban Institute, serves as a pivotal tool for measuring and tracking financial resilience across the UK. The index amalgamates unique consumer data and public measures to present a comprehensive view of financial vulnerability, aiding policymakers, local authorities, and stakeholders in enhancing financial resilience. The FVI reveals significant insights into financial vulnerability, showcasing a decrease in credit usage and adults in default, while highlighting an increase in reliance on social benefits.
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- Most FVI indicators have shown improvement, indicating resilience and recovery in the UK economy.
- The proportion of adults in default and average credit use have decreased, reflecting a focus on reducing debt.
- There is a decrease in credit usage, possibly due to higher interest rates pushing consumers to reduce credit usage.
- The number of benefits claimants has increased to 8.6%, indicating ongoing economic challenges.
- There are diverging trends of declining numbers in default and levels of credit usage, and a rise in social benefits.
- Financial vulnerability impacts different cities and regions of the UK variably.
- Overall FVI score: 40.2
- High-cost loans: 8.1%
- Average credit use: 50.9%
- Adults in default: 12.2%
- Social benefits: 8.6%
- Without emergency savings: 56.2%
- The change in Financial Vulnerability Index scores from Q2 2022 ranges from a decline of 1.8 ppts in the West Midlands to 2.7 ppts in Scotland.
Key Take Aways
- The UK economy exhibits signs of resilience and recovery as indicated by the improvement in most FVI indicators.
- A decrease in the proportion of adults in default and average credit use signifies a shift towards debt reduction.
- The unexpected decrease in credit usage may be attributed to higher interest rates influencing consumer behavior.
- The increase in benefits claimants to 8.6% highlights the persistent economic challenges faced by some individuals.
- Diverging trends in financial indicators suggest varying pressures and trends on UK households.
- Regional variations in financial vulnerability necessitate tailored policy responses for different urban areas.
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