Consumer confidence rises but debt divide widens

The gap between the UK’s wealthiest and poorest consumers is widening, according to a survey of 20,000 European consumers by credit management group Intrum.

The European Consumer Payment Report is an annual survey across 20 countries. Published today, it found only 48 per cent of the UK’s low-income consumers are confident they can pay all of their bills on time, and almost two thirds of those who reported missing a bill payment said it is becoming a regular occurrence for them.

This is despite the fact that more UK consumers are more positive about their financial futures than in the past, with almost three quarters able to pay their bills, and increasing numbers saying they can afford evenings out and holidays. 

Findings include:

•    72% of UK consumers can pay all bills on time
•    Only 53% of low-income consumers could cover a one-off cost of £350
•    69% say they have enough money to provide for their families
•    Almost four in ten (38%) say high living costs have had a permanent negative effect on their financial wellbeing
•    A quarter (26%) say their mental health has suffered as a result.

“Our survey shows that plenty of consumers have breathing room they haven’t seen for some time,” says Intrum UK Managing Director Gavin Flynn. “However the debt divide is widening and, for a significant minority, finances are tighter than ever, with higher costs taking their toll.” 

Indeed, consumers are preparing for future shocks, with six in ten prioritising putting money aside each month in an emergency fund and half hesistant about making big-ticket purchases such as houses and cars, or taking employment risks – for example starting a new business.

“These figures are an indication of sentiment, with nervousness about the possibility of another fall in living standards,” says Flynn. “Avoiding spending or starting a business because of perceived economic weakness risks becoming self-fulfilling. A healthy economy depends on consumers spending money.”

For the first time, the European Consumer Payment Report features a Money Management Index, to help understand why some consumers struggle with debt, even when they are paid significantly more than average. The report also covers changing consumer attitudes to technology such as AI, social media pressure to spend, and advice to businesses on helping consumers.