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YouGov Finance: The UK Is £3.5 Billion Overdrawn

Photo by Nick Pampoukidis on Unsplash

New research from YouGov Finance - which aggregates real transaction data from thousands of UK consumers - shows that, as of the end of July 2022, the UK was overdrawn to the tune of £3.5 billion.

Examining this metric since January 2021 shows some notable spikes. In December 2021, for example, you can see that the total value of consumer overdrafts hit £4.2 billion. This could be attributed to festive spending; data from last year’s Christmas period showed that nearly one in six Brits expected the financial strain of Christmas to increase their level of debt (14%).

The data also shows spikes at the end of May (when the value hit £4bn) and June (£4.2bn); the first billable months after the new energy price cap was introduced

Looking further into the data, you can see that, by the end of July 2022, some three in ten Britons (30%) had used their overdraft during that month. This represents a slight increase (28%) compared to this time last year. Overall, the proportion of people who have dipped into their overdraft has ticked upwards since January 2021.

Furthermore, looking at the total payments made so far this year in the UK (Jan-July) around one in eleven (9.3%) were made using an overdraft, showing a slight increase on 2021 (Jan-Dec) when 8.8% were made using an overdraft facility.

In July 2022, the first day Britons used their overdraft was, on average, the eighth day of the month; the same was true in July 2021. This metric remains relatively static, with some (less than dramatic) exceptions. For instance, the data shows that people were most likely to dip into their overdrafts a little earlier in February 2022 and February 2021 (in both cases, on the seventh day of the month).

Photo by JESHOOTS.COM on Unsplash

This isn’t to say people remain overdrawn all month. The most recent transaction data shows that consumers used this facility for 10% of July (and every month of 2022 before that). Broadly, overdrafts are used for a couple of days before consumers restore a positive bank balance – perhaps bridging a gap before payday arrives and after bills are due.

Commenting on the findings, Emma McInnes, Global Head of Financial Services at YouGov, said:
“Our data clearly highlights that there has been a longitudinal increase in short-term overdraft borrowing, a trend which started when COVID-19 support measures and restrictions were withdrawn in the UK and likely fuelled (at least in part) by the post-pandemic return to spending on discretionary categories like out of home dining and travel in the latter part of 2021 and into early 2022.

"However, it is evident that during a period of unprecedented inflationary cost of living pressures weighing on disposable incomes, the level of short-term overdraft borrowing is increasing rapidly and amongst a wider proportion of the UK population.

"With inflation figures for July hitting double-digits in the UK for the first time since 1982, the energy price cap currently set to rise again in October, and warnings of recession from the Bank of England, we need to keep a watchful eye on the degree to which this the UK population as a whole is relying on debt to help them get through the month.”