Half of Britons struggle with soaring cost of running households

Almost half of people in Britain are struggling with a surge in the cost of running their household after inflation hit a four-decade high, a think tank warned.

Some 44 per cent of working-age households were falling behind on rent and mortgage payments in November last year, up from 26 per cent in January 2021, the Resolution Foundation said in a report published on Saturday (Jan 28).

The figures, from a survey of 10,470 adults by YouGov, illustrate how the cost-of-living crisis has intensified pressures sparked by the Covid-19 pandemic.

Renters, who are facing the fastest rent increases in a decade, are at the sharp end of the crisis with 8 per cent of private renters falling behind on housing costs and 53 per cent struggling in the three months to November.

The picture looked even bleaker for social renters, as 19 per cent reported falling behind on payments and a further 44 per cent said they were struggling.

This meant many were unable to replace electrical items, or turn on their heating when needed, the survey found.

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Mortgage holders, meanwhile, have been battered by an unprecedented string of interest-rate increases from the Bank of England. The central bank is expected to push ahead with a 10th successive hike on Thursday. Traders are pricing in a 25 basis-point rise to 4 per cent, with the benchmark rate projected to hit 4.5 per cent by May. 

The share of mortgage holders falling behind or struggling with payments almost doubled from 27 per cent to 50 per cent between January 2021 and November 2022. Despite the sharp rise, the total in trouble was still less than among renters.

“With many renters reaching the limits of already depleted finances, this squeeze is having profound impacts on their household budgets and wellbeing,” said Cara Pacitti, senior economist at the Resolution Foundation. 

“As housing costs are set to continue rising, the situation for renters will worsen without further policy intervention.” BLOOMBERG