Five years after the first national lockdown, new research reveals that the financial scars of the COVID-19 pandemic remain deep across the UK, with low savings, growing reliance on benefits, and increased use of high-cost credit all pointing to widespread economic vulnerability.
A comprehensive study by Lowell, the credit management firm, and polling agency Opinium, highlights the extent to which British households – including those in higher-income brackets – are still contending with the prolonged aftershocks of the crisis. Drawing on data from more than eight million financial records, the latest Financial Vulnerability Index paints a sobering picture of household resilience in 2025.
Savings levels across the country have plunged, with 61% of adults reporting less than £5,000 in reserve – the worst figures since 2017. Over a third have less than £1,000, while 15% say they have no savings at all. In some regions, the situation is even more acute: 68% of adults in Northern Ireland and 66% in the North East report having no emergency buffer. Even in London, traditionally seen as a more prosperous region, more than half of adults admit to lacking any financial safety net.
This fragility is reflected in growing dependence on state support. Since before the pandemic, there has been a 2.7% rise in the number of UK households claiming social benefits. The West Midlands has been particularly affected, with 12.9% of households now receiving support – up 2% in just one year. In Yorkshire and the Humber, the figure has increased by 1.3% to 10.4%.
At the same time, more people are resorting to alternative credit products to manage rising costs. The use of payday loans and buy-now-pay-later services has climbed from 7.8% pre-pandemic to 11% in 2025. The data suggests that for many, such borrowing is becoming a necessity rather than a convenience.
What may be more striking is that financial strain is no longer confined to lower-income households. The study reveals a significant erosion of stability among middle-income earners. In regions where household earnings are above the national average, the proportion of adults without emergency savings has risen by 3% to 57.3%. Over half of families in these areas now rely on credit to make ends meet, with 52.4% reporting active borrowing. Alarmingly, almost two in five households earning more than £60,000 do not have enough saved for an emergency, and nearly one in twenty have no savings at all.
John Pears, UK chief executive of Lowell, said the data showed the UK had never truly recovered from the financial impact of the pandemic.
“It’s been five years since the first stay-at-home order was issued, but, as a country, we’ve never recovered financially,” he said. “We are seeing a large uptick in vulnerability, approaching the pandemic peaks again.”
He added: “Nearly all our indicators are in the red. Arrears are up. Savings are being eroded. Reliance on social benefits is increasing. These are all issues that have been bubbling away under the surface and are now coming to a head – and it’s not just the poorest who are struggling. Families in some of the most affluent neighbourhoods in the UK have seen their safety net fall away and are now exposed to income shocks. Layer on top of this rising bills across the board, and we have a population teetering on the edge.”
Pears called for greater collaboration between the financial services sector and government to tackle problem debt before more households find themselves in crisis.
