17 July 2023 , 16:59
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Millions are “living on empty” with household incomes not enough to meet even their essential bills, the UK’s biggest debt support charity has revealed.
Citizens Advice reported a rapid rise in those classed as having “negative budgets”, which it warned would become a “generational problem” without government action.
It came as the charity admitted it was increasingly unable to help those in need because those people have already cut back everything to the bare essentials.
In 2019, just over a third of Citizens Advice’s debt clients were in a negative budget, where they have maximised their income and costs are pared right back.
Citizens Advice reported a rapid rise in those classed as having 'negative budgets' (PA)Today it is over half and the number is growing almost all the time.
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The soaring cost of energy, food and other essential outgoings are partly to blame. But so are rocketing interest rates for those with mortgages and other debts.
Citizens Advice said the proportion of its clients who could no longer afford the property they were living in had almost doubled over a two-year period.
The average mortgage borrower seen by the charity had a £61 surplus after paying essential bills in the summer of 2019. That has now turned into an average shortfall of £118.
Matthew Upton, director of policy at Citizens Advice, said: “Something fundamental has changed.”
The soaring cost of energy, food and other essential outgoings are partly to blame (PA)He warned “millions of people (are) living on empty.
“Huge numbers doing all the right things but still ending up short at the end of the month.
“It also shows millions more questioning why they have so little left once the bills have been paid — nowhere near enough to build an adequate buffer or to afford much more than the bare essentials.”
And he added: “We think this is a generational problem that will define the priorities of any government for at least the next decade.”
Figures out on Wednesday are expected to show inflation remained above 8% in June (Getty Images)Figures out on Wednesday are expected to show inflation remained above 8% in June.
Economists reckon the Office for National Statistics will announce the consumer prices index measure of living costs eased from 8.7% to around 8.2% in June.
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But some think the drop will be less.
The outcome will be closely watched by the Bank of England, tasked with trying to get soaring inflation back to 2%.
Experts forecast the Bank will hike its base rate from 5% to 5.5% early next month, piling on pressure for millions of borrowers.