Estimated 4m people in England and Wales ‘are trapped in a negative budget’

An estimated four million people in England and Wales are trapped in a negative budget, with the cost of essentials outweighing their income, according to calculations by Citizens Advice.

The charity also estimated that in 2024/25, 320,000 people were just £50 from a negative budget.

This figure could rise to 580,000 in 2025/26 as living costs increase, the charity said, meaning that more than half a million people could be at risk of an unexpected shock pushing them into the red.

The calculations were made using data from Citizens Advice clients, using Office for National Statistics (ONS) data to help it make the projections for England and Wales.

Citizens Advice said the majority of people it helps with debt are in a negative budget and people in this group have average levels of debt of £9,963 per household.

The charity said it wants to see targeted utility bill support for those at the sharp end of rising prices.

Yvonne Parks, a debt team manager at Citizens Advice, south Gloucestershire, said: “I’ve seen it time and time again – missed bills lead to arrears, enforcement, deductions or credit damage. Stress and poor mental health reduce someone’s ability to manage finances or seek work. People fall into a cycle of crisis, repeatedly needing emergency help such as food banks, fuel vouchers or help with housing payments.

“Debt solutions have become a sticking plaster, not a resolution. Each time I help someone now, I know that it’s likely I’ll be seeing them a year on with further debt, through no fault of their own.”

Some groups in society are more exposed than others to falling into a negative budget, such as private renters and households with children, the charity said.

Mike Ambery, retirement savings director at Standard Life, said: “These findings from Citizens Advice paint a stark picture of the financial strain many households are under. Our own research echoes this reality – nearly a quarter (23%) of people are finding it difficult to live on their current income, rising to 27% for women and 28% for both Gen X and Gen Z. The pressure is even more acute for those not in work (48%), disabled people (36%), and those earning under £30,000 (38%).

“It can feel hard to think about the future when the present feels so uncertain. While long-term saving might not be a priority for everyone right now, it’s vital to keep the conversation going and ensure that support is available for those who need it most, and that nobody is left behind when it comes to preparing for later life. Everyone deserves the chance to build a secure future.”