NUMBER OF ‘FINANCIALLY VULNERABLE’ BRITISH HOUSEHOLDS CONTINUES TO RISE, SAYS LATEST GENWORTH INDEX
10 April 2014
According to the latest Genworth Index (6th Edition) carried out by Ipsos MORI
NUMBER OF ‘FINANCIALLY VULNERABLE’ BRITISH HOUSEHOLDS CONTINUES TO RISE, SAYS LATEST GENWORTH INDEX
- Twice as many British households deemed ‘financially vulnerable’ as ‘financially secure’
- More than half of households have experienced financial difficulties in last twelve months
- Britain however continues to enjoy greater financial security than Germany or France
LONDON, 10 APRIL, 2014: A major global study of financial consumer sentiment – including Great Britain, France, Germany and a number of other European countries – has shown the number of financially vulnerable households in Britain continues to rise with 22% (2012: 21%) now deemed ‘financially vulnerable’ and just 9% considered ‘financially secure’ – less than half the number in 2007.
The Genworth 2013 Index, by the global mortgage insurer Genworth, measures consumer financial security and vulnerability across Europe and the world. It looks at the extent to which households are experiencing financial difficulties and how they feel their financial situation will change over the year ahead.
The report – based on a survey of up to a thousand consumers in each of the 20 countries – shows that Great Britain has twice as many financially vulnerable households as those classed as financially secure, however it continues to outperform its traditional economic neighbours and has maintained its European placing.
GB registered an ‘Index Score’ of 41 (2012: 39) on the scale of financial security placing it fifth on the European table ahead of both France and Germany but lagging behind the Nordic countries. Britain’s 9% of financially secure households compares favourably with Germany (10%) and France (6%) but again is bettered by the Nordic countries which have an average of 14%. The GB Index Score is 19 points down on the 60 it achieved in 2007.
The majority of British households – 51% - say they experienced financial difficulties at least ‘sometimes’ in the past 12 months. This type of pressure was more keenly felt by those under-55 (63%) than those over-55 (33%).
Optimism about households’ financial future is split between those who are under 35 years and those between 35-64 with the younger age group much more positive about their financial prospects. 37% of under-35s believe things will get financially better in the next year versus 17% who think it will get worse; 25% of 35-64 year olds think their financial situation will get worse while 19% believe it will improve.
Confidence about the prospects for the UK economy is currently polarised with 34% of households more confident than 12 months ago while an almost equal proportion (33%) are not. British households continue to face real concerns about their financial security with 41% saying they feel stress as a result of money issues and only 21% feel their job is more secure than it was a year ago. There is a clear relationship between financial well-being and job security: 55% of those who are financially vulnerable believe their job is less secure compared to 17% of those who are financially secure.
Genworth believes ongoing issues such as a fear of short-term financial troubles and poor job security is holding back the UK mortgage and property markets. The effects are leaving many households unable to save deposits for house purchase and unwilling to make a significant financial move, such as buying a property, because of uncertainty with regards to their ability to continue paying a mortgage should they lose their job.
Simon Crone, Vice-President – Mortgage Insurance Europe at Genworth Financial, said:
“Despite all the upbeat economic data and the growing positivity around Britain’s economic recovery it’s still obvious there is a wider ongoing trend towards households feeling more financially vulnerable than financially secure. Consumer confidence is lagging some way behind the recovery and, perhaps unsurprisingly, great swathes of British households are feeling less secure than they were pre-2007.
“The positive news is that Britain has kept up with its European neighbours and continues to place above both Germany and France. The number of UK households who feel financially secure has risen slightly, however we are still a long way from getting back on an even keel.
“There continues to be a marked age divide amongst British households with older people much more likely to feel financially secure than their younger counterparts. Having said this, we are seeing stronger levels of optimism from those in the younger age bracket that their financial circumstances are going to improve in the short-term. This could be put down to the improving economy and the falling levels of unemployment.
“Financial vulnerability comes from a number of different pressures including meeting higher cost of living expenses, ongoing low wage growth, its impact on savings levels and future concerns over job security. We still have many households that are financially fearful about what might be coming over the economic horizon and this undoubtedly is holding them back – particularly when it comes to making large, long-term commitments such as purchasing a home.
“British households remain cautious about their future financial position and it appears that a more sustained, long-term economic recovery is needed to lift more people out of the financially vulnerable bracket.”
The full Genworth Index: Measuring Consumer Financial. Security and Vulnerability is available at: http://www.genworth.co.uk/about-us/genworth-index-2014.html
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About the Genworth Index
The research was conducted using Ipsos MORI's Global Omnibus in 20 countries across Europe, Latin America and Asia, between January and February 2014. Questions were asked of samples of up to 1,000 adults in each country. Results are weighted to be representative of the population within each country.
The Index is the result of a 2007 developmental project commissioned amid growing concern about rates of consumer borrowing and over-indebtedness. The purpose of the project was to devise an internationally-relevant, standardised and timely measure of consumer financial security. The Index design was undertaken by the Personal Finance Research Centre, University of Bristol and the European Credit Research Institute.
The Index is based on two measures – the extent to which households are experiencing financial difficulties now, and how they feel their financial situation will alter over the next twelve months. The Index combines the answers to these two questions and groups people according to the replies they give. The Index score is a ratio based on two of these groups – financially secure households (those rarely experiencing financial difficulties and who think their future financial situation will improve) and financially vulnerable households (those who often experience difficulties and expect their future situation to deteriorate). The score is rescaled with scores ranging from 0-100 – higher scores represent higher levels of financial security.
Genworth Mortgage Insurance in the UK
Genworth focuses on mortgage insurance and lifestyle protection in the UK and Europe, working with building societies, banks and other financial institutions. Since 1993, Genworth has been offering flexible mortgage insurance solutions to suit different lender requirements, whether that is on a loan-by-loan basis or at a portfolio level. Our protection to lenders makes high loan-to-value mortgage loans (where the borrower does not have a large deposit) available to good credit-quality borrowers. Genworth is regulated by the PRA and FCA, has unmatched expertise and capacity including a unique arrangement with highly rated reinsurers.
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Genworth Financial, Inc. (NYSE: GNW) is a leading Fortune 500 insurance holding company dedicated to helping people secure their financial lives, families and futures. Genworth has leadership positions in offerings that assist consumers in protecting themselves, investing for the future and planning for retirement -- including life insurance, long term care insurance, and financial protection coverages -- and mortgage insurance that helps consumers achieve home ownership while assisting lenders in managing their risk and capital.
Genworth operates through three divisions: U.S. Life Insurance, which includes life insurance, long term care insurance and fixed annuities; Global Mortgage Insurance, containing U.S. Mortgage Insurance and International Mortgage Insurance segments; and the Corporate and Other division, which includes the International Protection and Runoff segments. Products and services are offered through financial intermediaries, advisors, independent distributors and sales specialists. Genworth, headquartered in Richmond, Virginia, traces its roots back to 1871 and became a public company in 2004. For more information, visit genworth.com. From time to time, Genworth releases important information via postings on its corporate website. Accordingly, investors and other interested parties are encouraged to enroll to receive automatic email alerts and Really Simple Syndication (RSS) feeds regarding new postings. Enrollment information is found under the "Investors" section of genworth.com.
