The average UK household is just days away from an emergency situation in the event of sudden financial hardship, according to a new report to be released this week. Meanwhile, one food bank has reported a surge in new participants.
The consequences of severe economic fallout would present a real challenge for many people, considering that more than one-third of households (36 percent) in the UK have “no strategy in place to cope with financial hardship,” according to a report from Legal & General, citing data from the Centre for Economics and Business Research (CEBR).
The survey of some 5,000 people in the UK, analyzed in The Independent, shows marked contrast among people around the UK to be able to make ends meet following the loss of a job or other economic crisis, like a lengthy illness. In Wales, for example, most people would only be able to survive for seven days in the event of an economic setback, compared with Londoners, who would be able to keep going for 83 days before their funds ran out, according to the poll.
More than one-third (35 percent) of the population has no backup savings to protect them in the event of a financial emergency.
Among the most vulnerable demographic are citizens of working age (18 to 64), which the survey reported are just two weeks away from requiring some sort of government assistance.
The results of the survey should provide a wakeup call for many Britons, many of whom, according to the authors of the report, believe they could survive 77 days following a “sudden loss of income.”
The report does provide some basic clues on how to better endure a hypothetical economic breakdown. First, get rid of that monthly mortgage payment. Households that have paid off this debt are able to last an estimated 426 days – over a year – before draining their savings. Those with a mortgage payment last less than a month before their money vanishes.
However, households that rent from private landlords are in the worst position, being just “two days away from the breadline,” the report says.
The results of the survey expose “the harsh reality that many households are on the brink and just weeks away from becoming reliant upon family, friends or the state,” John Pollock, chief executive of Legal & General Assurance Society, told the Independent. “Despite improvements in the employment market, the average working-age family is just two weeks away from the breadline.”
“With new economic headwinds approaching and an interest-rate rise on the horizon, now is not the time to be burying our heads in the sand,” he added.
Pollock suggested that more people begin to take their economic security more seriously.
“Talk of the economic recovery and an increase in consumer confidence could lead many people to revert back to their old habits when now really is the time to think about protecting their future,” he concluded.
The survey comes as a record number of low-income families are seeking assistance from food charities, new research has revealed.
Some 500,000 adults and children were given three days’ emergency food supplies in the first six months of 2014, Trussell Trust, a UK charity organization, reported, as cited by the Guardian.
The charity said the number of people referred to its 400 food banks had jumped 38 percent compared with the same period last year.