View all news

Many households are still facing the financial squeeze, new research confirms

Press release issued: 21 October 2011

Many families are taking drastic measures to make ends meet, according to new research from the University of Bristol that confirms low and middle income households are still in ‘recession’.

The recession may technically be over but multiple drops in household income and the rise in the cost of living has led to households adopting diverse strategies to adjust to their financial situations – from walking to the supermarket instead of driving, to selling the family pet.

The difficulties some were experiencing were brought into sharp focus by deprivation and arrears on bills or credit commitments.

The study revisits research first undertaken for the Money Advice Trust in 2009, when it was found that people whose financial situations had not worsened were nevertheless exercising ‘precautionary restraint’ in relation to their spending.

The evidence from the recent study, in stark contrast, pointed far more clearly to households making changes in their everyday spending as a result of recent or more prolonged changes in spending power. For some, this meant shopping ‘smarter’ or cutting back on non-essentials. For others it extended to finding ways to save on gas and electricity and selling the family car or pet.

Despite widespread efforts to tighten their spending and money management, there was considerable evidence that households were continuing to rely on unsecured credit, and increasingly so in some cases. While they were using credit cards, overdrafts and store cards with the same frequency and for the same reasons as before, they were not clearing the balance as they had in the past.

Participants perceived that mainstream consumer credit was difficult to access, and expensive. Some were conscious of the importance of maintaining a good credit rating. Others implied that they were actively retaining unused credit cards and overdrafts due to anxieties about whether they would be able to access new borrowing if and when they needed it.

Despite showing clear signs of financial strain, participants did not necessarily perceive themselves to be in financial difficulty. It was primarily a perceived lack of need that meant most households had not sought money or debt advice. Some felt they did not need advice because they weren’t “really struggling”, despite showing signs that they were indeed stretched or in some degree of financial difficulty.

Andrea Finney, co-author of the research carried out by the University of Bristol’s Personal Finance Research Centre, said: “The resolve that people on low and middle incomes show in creatively and in many cases effectively adjusting to their straitened situations is admirable. But ultimately, households can find themselves at the limits of their resources with nowhere else to go.

“The study findings underline the continued need for Government to ensure that robust policy responses provide the security that the most vulnerable households need to get by, and to continue to support free-to-client debt advice services through centralised funding.”

Joanna Elson OBE, Chief Executive of the Money Advice Trust, said: “For the time being we may be out of the technical recession, but the ‘public’s recession’ has never gone away, in fact it’s been getting steadily worse. Free, impartial advice is available and can make a real difference. Unfortunately, too few people recognise their own financial difficulty as a problem they have to solve, and instead cut back further and further and increasingly rely on credit.”

Anyone with concerns over their finances should contact National Debtline, visit or go to their local Citizens Advice Bureau for free, impartial advice.

Further information

The research was undertaken by the Personal Finance Research Centre at the University of Bristol. The study was commissioned by the Money Advice Trust and funded by Provident Financial. The full report and a summary are available at and

The study, ‘Facing the Squeeze 2011: A qualitative study of household finances and access to credit ' by Andrea Finney and Sara Davies, was published today by the Money Advice Trust.

The Money Advice Trust is a charity formed in 1991 to increase the quality and availability of money advice in the UK.

The Bristol study involved 30 depth interviews with credit-users aged between 18 to 55 living in low and middle income households.

Edit this page