The current situation is worse than any point during the pandemic. Of those 4.4m in serious financial difficulties, to make ends meet 71% have reduced the quality of food they eat, 36% have sold or pawned possessions and 27% have cancelled or not renewed insurance.

The Coronavirus Financial Impact Tracker, commissioned by abrdn Financial Fairness Trust and analysed by experts at the University of Bristol, has been monitoring the personal finances of households since the start of the pandemic (sample around 6,000 people).

Half of all households (51%) now consider their overall financial situation to be worse than at the start of the pandemic. When the same question was asked in October 2021, just one-third thought their situation had deteriorated since March 2020.

Since the last survey (October 21), single parents have seen the greatest decline in financial wellbeing, with the proportion in serious financial difficulties rising from 23% to 37%. Other groups particularly hit include social renters, private renters and households with two children (all with a rise of more than ten percentage points). The only group seeing a reduction in serious financial difficulties was households earning over £100,000 per year. In addition to the 4.4m in serious financial difficulties, a further 20% (up from 17% in Oct 21) are struggling financially. As a result, 36% of UK households are facing significant financial hardship (either in serious financial difficulties or struggling).

Researchers found people were using a variety of methods to tackle rising energy bills, since the start of January 2022:

• 31% had reduced the number of showers/baths taken
• 60% had avoided turning on the heating
• 33% had reduced use of the cooker/oven
• 24% had heated only part of their home

Just under one-in-five (18%) households had not undertaken any of these actions, meaning that the vast majority (82%) had tried to do at least something to counteract rising energy prices.

Another way people are trying to reduce outgoings is reducing their pension savings. 21% of those for whom their main income is from the ‘gig economy’ had stopped or reduced pension contributions. The numbers are lower for those who are self-employed (12%) or have at least one earner (9%), however, even these lower figures could have long-term significance for financial resilience.

The research shows some geographic variation in rates of households in serious financial difficulty. While overall 16% of UK households are in serious difficulties, this rises significantly to 22% for Wales, 21% for Scotland and 20% for the North East of England.

Looking to the next three months:

• Half (50%) of households are worried about their ability to meet their gas or electricity bills.
• Two-in-five (39%) are worried about their ability to cover food costs.
• Three-in-ten (29%) are worried about their ability to meet their housing costs (rent or mortgage).

Nearly 6 in 10 (58%) are very/quite worried about their financial situation, especially disabled households (72%) and those on receiving or applying for benefits (77%).

One measure the government introduced (in March 2022) to help with rising energy bills was the ‘Council Tax Rebate’, a refund of £150 of council tax to households living in properties in council tax bands A to D. The research indicates the reduction may not be reaching all those who needed it most. A similar proportion of households in serious financial difficulties (40%) reported receiving the rebate as those in a ‘secure’ financial position (41%). In addition, as much as a quarter (26%) of households with a gross annual income of over £100,000 reported receiving the rebate.

Mubin Haq, CEO of abrdn Financial Fairness Trust, said: “The latest findings from our survey starkly show that people are facing a significant squeeze to their finances.

“This is the first substantial deterioration we have seen since tracking people’s finances when the pandemic started. Times are tough for everyone, but it’s those on the lowest incomes who are particularly feeling the effects of rising prices.

“Many of the measures brought in by the government were welcome and generally well-targeted though as our analysis shows that is not always the case as highlighted by the council tax rebate. More worryingly these are short-term remedies.

“Wages have largely stagnated and are no longer keeping pace with inflation; and social security is lower in real terms than it was over a decade ago. A more comprehensive and longer-term plan is urgently needed to ensure living standards do not sink even further.”