Constituencies across Greater Manchester have higher Financial Vulnerability Index scores than the average in both the UK and the North West.
Households are struggling with high inflation and rising bills amid the cost of living crisis – and new data shows how Greater Manchester’s constituencies are faring.
Manchester has recorded above-average financial vulnerability since the peak of the Covid-19 pandemic in the summer of 2020 and has decreased only slightly, the data experts say.
And there are concerns that credit use is rising sharply across the North West as households try to cope with everything getting more expensive.
What is the Financial Vulnerability Index?
The FVI measures how vulnerable residents living in an area are to financial problems, and there are six things it uses to measure this.
They are the percentage of people in an area who are in default, in receipt of benefits, on expensive credit, lacking emergency savings, and relying on alternative financial products such as payday loans.
The sixth metric considered is residents’ average credit usage to find out how reliant they are.
Each parliamentary constituency is then given a total score between 0 and 100. The higher the score, the more vulnerable the residents of an area are.
It is based on anonymized data from around 9.5 million customer accounts from Lowell UK and other publicly available data sources.
What does the Greater Manchester Index show?
The latest figures from the FVI show that constituencies in Greater Manchester are significantly more vulnerable than average.
The average score for the UK is 43.1 and for the North West is 49.1.
But the latest index gave Blackley and Broughton a score of 60.9, with around 60% of constituency adults having no emergency savings and more than a quarter defaulting.
Manchester Gorton has an index score of 58.1 and Wythenshawe and Sale East had a financial vulnerability rating of 56.9, while Bolton South East scored 56 and Oldham West and Royton scored 55.7.
It was 53.5 in Salford and Eccles and 53.3 in Manchester Central.
The latest figures released from the index also show that Manchester has had above-average financial vulnerability since the second quarter of 2020, down just 3.1 points since then.
And like residents across the North West, Manchester’s credit utilization is rising as bills rise, with the city’s average credit utilization reaching 51.9%.
What does the index show for the UK as a whole?
Recent updates to the index show that UK households are turning to credit as inflation means essential necessities are now costing more. Credit utilization was the highest in the last quarter since early 2020.
Rate hikes have also done nothing to discourage the most financially vulnerable residents from borrowing, which the index compilers say proves that borrowing is a necessity, not a choice, for the worst-off consumers.
There is better news, however, as the UK’s overall financial vulnerability has declined since the index was last updated, largely due to the decline in the proportion of adults receiving welfare benefits, experts say.
Payday loans across the UK have also continued to decline.
What was said about the latest numbers?
John Pears, UK CEO at Lowell, said: “The cost of living is rising across the board, hitting cities in the North West like Manchester hard.
“Households have to spend more money to pay for essentials like groceries and bills. As the rising cost of living pushes budgets to the limit, people are increasingly turning to credit.
“Today, for many, a single income shock can be enough to push a household into problem debt. People need help to cut costs.
“The new government must take action to ensure households, particularly those on the lowest incomes, get the support they need.
“With the recent price cap changes, reducing energy costs must be a priority. That has to be high on the agenda.”