In this, the third phase of an index survey conducted in collaboration with Ipsos MORI on behalf of Genworth Financial, 14,000 respondents in 14 European countries were asked about their current and recent exposure to financial difficulty and about how they feel about their financial future: two key indicators which together measure what is known as ‘financial vulnerability’.

On the index, a positive score indicates relative financial vulnerability while a negative score indicates relative financial security.

The scores show that there was a substantial shift towards optimism among British households. Almost a quarter (24 per cent) of respondents felt that their financial position will improve over the next 12 months, compared to 15 per cent in 2008. The number expecting their situation to worsen more than halved from 36 per cent in 2008 to 13 per cent in 2009. The changes experienced in Britain were far greater than the average for all countries surveyed and are unlike any other individual country in terms of magnitude.

Overall, Britain scored 10 points and this indicates an improvement in relative financial vulnerability since the previous phase in autumn 2008, when it stood at 23 points on the index. This makes Britain the 10th most financially vulnerable country in the 14 European countries surveyed, worse only than the Nordic countries. This is also some distance from its baseline score of minus 19 in 2007 when, as a whole, the country was experiencing relative financial security.

Follow-up research, conducted by Ipsos MORI for Genworth, examined a group called ‘strivers’: those who face financial difficulty but feel positive about it. The findings revealed that the main reason consumers feel more upbeat stems from factors relating to their own circumstances, whether these related directly or indirectly to economic factors or to personal circumstances more generally.

Andrea Finney, the main author of the report explains:

‘The “striver” category increased considerably in 2009 up to 15 per cent from 8 per cent in 2008, and it appears to have been made up of households that have migrated from the “financially vulnerable” category – those who have experienced difficulty and do not expect things to get better.

The follow-up work shows that, overall, optimism among strivers centred around five key themes: work prospects, money management, the wider economy, personal circumstances and general disposition. Not surprisingly, the first three relate directly or indirectly to the economic climate. However, perceptions about the wider economy featured far less and respondents’ expectations appear not to have been driven greatly by media coverage on the economy.’

The fall can be attributed to both a modest alleviation of financial difficulties and less pessimistic expectations of the future financial position of households but masks wide variations in the experience of different countries and is still some way short of the levels of security seen in 2007 when Europe had a score of 7 on the index.

The USA (new to the index for 2009), on the other hand, was revealed to be less vulnerable than Europe, despite the harsh economic climate it has faced over recent months. Relative financial vulnerability for the USA was at 14 points on the index compared to the average of 28 points across the 14 countries in Europe. Of all the individual European markets surveyed, the index score for Britain is most similar to the USA.

'The varying levels of vulnerability across Europe undoubtedly reflect the different experiences of recession in individual countries and the extent to which some markets are starting to show signs of economic recovery while others are not.  

The two countries with the worst levels of financial vulnerability – Ireland and Poland – benefited respectively from the economic boom and Poland from its entry to the European Union.  Following the high levels of growth that came with this it’s clear that the shock of the global financial crisis was felt most acutely here,' said Ms Finney.