Overview

This twelfth edition of the Financial Fairness Tracker also comes in the wake of the UK Government’s Spending Review 2025 (on 11 June), with limited resources available for government departments beyond health and defence, and the prospect of real-term cuts in some areas of spending after this year. The economic outlook was further clouded when the OECD downgraded the UK's GDP growth forecast (i.e. the amount of economic activity happening in the UK) to 1.3% for 2025 and 1% for 2026, citing trade uncertainties and low business confidence. 

At a household level, the Tracker shows that cost-of-living worries are far from over for millions of households across the UK, as prices for essential goods and services continue to outpace income growth. While welcome, the minimum wage rise of 6.7% for those over 21 in April 2025 will not keep up with the 9.4% annual increase in energy prices. The Chancellor has, however, announced that more people will receive the Winter Fuel Payment “this winter”, reversing its very unpopular policy that saw 10 million fewer pensioners receive the £300 help towards energy bills in 2024 – and which may well have contributed to Labour losses in the local elections. 

While energy costs (deservedly) get a lot of attention, they are only one of rising utility costs that households must contend with.  Price rises from April 2025 for broadband and mobile are expected to add an average of £21.99 annually for those on inflation-linked contracts and up to £42 a year for those on newer "pounds and pence" plans mandated by the regulator, Ofcom.

In addition, national average water bills for the coming year are forecast to be £603 - a rise of £123 or 26% - which equates to an increase of around £10 a month. For households with water meters, water costs could potentially be much higher, especially where there are high water consumption needs, for example due to health conditions or impairments. As this edition of the Tracker shows, the alternative for a third of households in our survey (34%) was to cut back water use, with one-in-five (19%) reducing the number of showers or baths they take. 

Key findings

• The cost-of-living crisis continues for many, and more households now have low financial wellbeing than 12 months ago. Four-in-ten households (39%) in May 2025 were ‘struggling’ (24%) or ‘in serious difficulties’ (15%) – which equates to over 11m households, and 300,000 more than in May 2024. Just a quarter of households were financially ‘secure’ (26% or 7.5m households), down by 500,000 in the last 12 months. 

• Household bills are the main pressure point. Almost all households (93%) said their bills had increased ‘a lot’ or ‘a little’ since November 2024, with three-in-five (60%) reporting that five or more of the nine bills asked about had increased. Increases in Council Tax, food, energy and water bills were the most widely reported.

• Financial insecurity takes a significant toll on households’ wider wellbeing. Three-in-ten of all households (29%) felt their financial situation was making their physical health worse, rising to 47% of Personal Independence Payment (PIP) or Disability Living Allowance (DLA)recipients, 53% of those in the bottom income quintile and 62% of Universal Credit (UC) recipients. Mental health impacts were even more pronounced: 35% of all households reported poor mental health due to their finances, increasing to 69% among UC claimants and over half of those on PIP/DLA (52%). 

• Households are generally not in favour of cuts to welfare and spending. When asked about potential Government policy options, most respondents (58%) felt that reducing spending on benefits for disabled people or reducing overall spending on public services would do ‘more harm than good’. Regarding the welfare changes already announced (including tighter eligibility criteria for PIP) twice as many respondents felt that the Government’s proposals were the ‘wrong choice’ (54%) than the ‘right choice’ (26%). 

• Households are more receptive to some potential tax rises. When asked whether they would support future potential tax rises if necessary to pay for public services, 61% of respondents supported taxes on tobacco, vaping, alcohol, unhealthy foods and gambling and 54% supported taxes on wealth. Unpopular tax rises included Council Tax/rates (57% opposed), taxes on general spending (such as VAT) (52% opposed) and taxes on income (such as income tax and national insurance) (48% opposed).

About the research

This report is based on results from the 12th wave of the Financial Fairness Tracker, a periodic cross-sectional survey commissioned by the abrdn Financial Fairness Trust. The survey has been tracking the financial situation of UK households since the start of the coronavirus pandemic in early 2020, providing an overview of households’ income, spending, borrowings, savings, quality of life and perceptions of key policy-related matters. Data was collected from over 6,000 households in May 2025 via Opinium’s politically- and nationally-representative sample and then analysed by researchers at the University of Bristol’s Personal Finance Research Centre (PFRC).