Cost of living crisis: Study reveals Merseyside areas struggling most as more households fall into debt

A new study has revealed which areas of Merseyside are struggling the most financially as the cost of living crisis continues to severely affect the UK.

And many households are balancing on a ‘financial cliff edge’, according to research by one of Europe’s largest debt collection companies, Lowell, and think tank Urban Institute.

The data builds ‘a complex picture of financial health in the UK’ and shows people are increasingly falling into debt as they borrow to meet the growing cost of living. There are now as many people in default on their debts as there were at the peak of the pandemic.

Financial struggles in Merseyside

The researchers’ Financial Vulnerability Index scores each constituency from 1 to 100, with higher numbers signifying greater financial vulnerability.

It combines analysis of Lowell’s 9.5 million customer accounts with official statistics from the UK Government and Office for National Statistics.

It is based on six components that capture a household’s ability to manage daily finances and resist economic shocks: carrying debt in default, using alternative financial products such as payday loans, claiming work-related benefits, lacking emergency savings, holding a high-cost loan and relying heavily on credit.

In Merseyside, the Liverpool Walton constituency had the highest Financial Vulnerability Index score of 61.7 out of 100, followed by Knowsley, with a score of 58.7. Sefton South had the lowest ranking at 45.1.

To see how your constituency scored, zoom in (hold down CTRL and scroll) on the map graphic below.

What’s been said

The Financial Vulnerability Index score continues to improve across the UK as a whole, but the researchers warned that some places, particularly less affluent urban areas, were being left behind.

A spokesperson for the Department for Work and Pensions said: “We recognise the pressures of the rising cost of living, which is why we delivered £1,200 of direct support to millions of households last year, including £400 towards energy costs, and will be providing a further £1,350 of support to the most vulnerable households in 2023-24.

“Our Energy Price Guarantee is also saving the typical household another £900 this winter and we are increasing benefits in line with inflation at 10.1% from April, while our Household Support Fund is helping people in England with essential costs.

“Those in debt may be able to access the ‘Breathing Space’ scheme, which gives them time to organise debt advice and solutions, while the government-sponsored MoneyHelper service has information about debt management and free debt advisory support.”

A spokesperson for the Treasury added: "The best thing we can do to help families is to stick to the plan to halve inflation this year. This week at the Budget, the Chancellor will set out the next stage in our plan to bear down on inflation, reduce debt and grow the economy."