Madame economisté

Stronger shock absorbers: How to build the financial resilience of low-to-middle income households Savings are supposed to be the first line of defence against financial shocks. But in reality, millions of families across Britain don’t have enough to be more than a few pay-days away from trouble.…

And you can also watch back our event on the report here! buff.ly/9jgMhCe

Thats all for now but you can read the full report here: www.resolutionfoundation.org/publications...

What needs to happen? Policymakers must boost savings through schemes like Help to Save, expand fair access to affordable credit, tackle high essential costs with social tariffs and stronger Council Tax support, and relieve the stock of arrears already built up.

But we also know household finances are complex. Families juggle savings, borrowing, and bills in different ways, making trade-offs based on what feels most urgent. For some, keeping up credit repayments comes first; for others, it’s paying the rent or energy bill.

1) Bills remain much higher than pre-pandemic
2) Credit is more expensive (interest rates up since 2021) + Lenders have tightened criteria = less affordable for poorer families.
3) Regulators have softened some of the consequences of being in arrears - so its no longer as scary

But why is this happening? We can point to 3 reasons...

...but now arrears are creeping further up the income distribution. In 2023–24, 15% of families in the second income quintile were behind on at least one bill, compared with single-digit levels just a few years earlier.

Council Tax arrears in England tell the same story. They stood at £4.6 billion in 2019–20 but have risen by almost half to £6.7 billion in 2024–25. These debts are increasingly concentrated among poorer families...

For instance, energy arrears have more than doubled during the cost of living crisis. The total stock rose from £1.7 billion in early 2019 to £4.2 billion by early 2025. Nearly 1 million electricity and almost 1 million gas customers are now behind on their bills

But the real story is what has happened to arrears on priority bills — figures show there has been a rapid accumulation of arrears on the biggest household bills.

The cost of living crisis followed straight after. Normally we might expect savings to collapse and debts to surge. Yet household balance sheets among poorer families held up better than feared: consumer credit use did not rise, and many continued to save.

Most of this improvement came after 2012, as the economy recovered, and it even continued during the pandemic. Lockdowns gave many families the chance to build up savings, showing how resilient behaviour can grow when conditions allow.

There has also been progress on savings. Between 2006 and 2022, the share of poorer households with less than £1,000 set aside fell from 63% to 43%. More families have at least a small buffer in place to deal with unexpected costs.

This means families are carrying less debt than before the financial crisis. And for low-to-middle income households specifically, average consumer debts are lower today than in 2006–08. Formal borrowing like credit cards and loans has fallen, significantly.

Let’s start with the good news. Consumer debt has fallen sharply since the mid-2000s. It peaked at around £5,700 per person in 2005, but has since declined to just £3,300 today — the lowest level on record.

Long-term wealth can tell us something about resilience, but it doesn’t capture families’ day-to-day realities. What matters when shocks hit is whether households can draw on savings, borrow affordably, and avoid falling behind on bills...

Long-term wealth can tell us something about resilience, but it doesn’t capture families’ day-to-day realities. What matters when shocks hit is whether households can draw on savings, borrow affordably, and avoid falling behind on bills...

For more analysis on how housing is affecting living standards for UK families, check out our Housing Indicators here: buff.ly/A2Wof3A

Today, nearly 1 in 4 families with children (23%) live in the private rented sector, compared to just 1 in 12 (8%) at the start of the millennium. This affordability gap between earnings and rents will continue to add to the cost-of-living pressures facing families.

This worrying picture on private rents is a growing problem for living standards across Britain. More people than ever before are relying on the private rented sector - not just for a few years, but long term.

Rents aren’t outpacing earnings everywhere. In a 1/3 of local authority areas, including the Derbyshire Dales and Hartlepool, earnings since May 2022 have instead outpaced rents, easing the pressure on local private sector renters.

This sharp rise in the affordability wedge is not confined to London. In the Welsh Valleys, rents in Torfaen have increased by 40% in the past 3 yrs, while pay has grown only 21%. A similar pattern is seen in neighbouring Rhondda Cynon Taf.

At the local level, this ‘affordability wedge’ has been most stark in London with 6 boroughs featuring in the top 10 local authorities with the biggest affordability gap. In Tower Hamlets, rents are up 35% since 2022, while earnings have risen by just 18%.

But from mid-2022, the points at which rents accelerated, earnings haven’t kept up, especially since 2023. This has opened up an ‘affordability wedge’. Had rents grown in line with earnings since May 2022, average rents would be £720 a year lower today.

So, why has rental price growth been high recently? An important driver of rent levels is renters' ability to pay and in general, rents track earnings closely. Over the past 10 yrs, rents and earnings have grown by 45% and 50% respectively.

Slow price growth for new lets suggests we’ll continue to see pressures ease in the rental market overall.

While rents overall continue to rise, data on new tenancy prices from Homelet shows annual growth was just 0.4% in July – a dramatic slowdown from the 10%+ increases recorded in mid-2022, &the slowest rate of growth (for new tenancies) in 8 years.

The rate of rental price growth, and the extent to which growth is slowing, varies across regions. Rents are growing more than twice as fast in the North East as in Yorkshire (8.9% compared to 3.5%). The rate of growth slowed fastest in London (down from 7.3% to 6.3%).

New private rental price data out today shows prices are still climbing - but the pace of growth is continuing to ease. In the year to July 2025, UK private rents rose to 5.9%, down from 6.7% in June.

Home Heritage - UK Collaborative Centre For Housing Evidence Britain today is more diverse than ever before, and recent polling suggests that public attitudes towards diversity have grown increasingly positive. However, beneath this progress lies a persistent r...

Ethnic minority adults in Britain spend far more on housing than White British adults—yet often live in smaller, overcrowded, or poorer-quality homes.

In my latest blog, I explore what's behind this disparity.

Read the full piece here: housingevidence.ac.uk/home-heritage/