UK households showing first signs of recovery?

By UK CreditCards.com

Household finances appear to have improved slightly in the first few weeks of 2012, according to Legal & General's latest MoneyMood survey. There has been a fall in the number of "struggling" households and an increase in the number saying they are "surviving." These could be the first signs that recovery may be on the horizon.financial-recovery

Fall in struggling households
The number of households that struggle to pay their bills and find themselves at least £100 short each month has fallen by roughly 244,000 compared with the final quarter of 2011, according to Legal & General's research. This means that around a quarter of a million households are now coping better with their bills than they were last year.

"Survivors" on the rise
While many families still cannot relax about their finances, the research indicates that more households are surviving -- in other words, managing to cover their bills and debt repayments each month. The survey found that almost 1.5 million more households are surviving financially than in the third quarter of 2011.

"Perhaps the combined effect of lower inflation and the costs of utilities and food starting to fall is producing some green shoots of recovery in household finances," said Mark Gregory, Legal & General's executive director of savings, in a statement.

"Stable" households setting some money aside
However, the research also uncovered a fall in the number of "stable" households, those with money left over at the end of each month. Forty-five percent of UK households were stable at the end of 2011, compared with just 39% today.  

Moreover, being financially stable is not the same as being financially comfortable. Among these stable households, the average family is managing to save £93 per month -- just 3.4% of average household income. The survey also revealed a significant north-south divide, with households in the south of England typically saving around twice as much as their northern counterparts.

See related: Many UK families dangerously close to financial ruin; Fall in household debt no cause for celebration

Published: 22 February 2012