One in six UK workers is now struggling to pay their bills at the end of every month, according to a major new study that lays bare the ongoing impact of the cost of living crisis — even as inflation cools and real wages begin to rise.
New data from the Work Foundation at Lancaster University reveals that 17 per cent of workers surveyed say they regularly struggle to cover essential outgoings. A further 40 per cent report having little or no disposable income left over for savings, holidays or emergencies.
The findings come as separate figures from the Office for National Statistics show that more than a quarter of UK adults (26%) cannot afford an unexpected but necessary expense of £850 — the highest proportion since September 2024.
Ben Harrison, director of the Work Foundation, warned that Britain’s deep-rooted pay stagnation is still shaping day-to-day life for millions. “Raising living standards is not just about figures on a spreadsheet — it’s about workers feeling financially secure,” he said. “Four years on from the start of the worst cost of living crisis in a generation, our analysis shows workers continue to feel the impact of nearly 20 years of stagnating pay packets.”
The pressure on household finances is fuelling a dramatic rise in the number of workers taking second jobs. Official data shows that 1.23 million people now juggle multiple roles — the highest number on record and a 10 per cent increase on the year.
“Second jobs are sometimes glamorised as side hustles or optional extras, but economic necessity is often the key motivation,” said Harrison. “Despite a period of sustained pay increases, many workers still aren’t earning enough in their main jobs to cover essential costs.”
Younger workers are especially vulnerable. Half of all 16- to 24-year-olds surveyed said they feared losing their job in the next 12 months, amid a wider slowdown in the UK labour market. The unemployment rate has climbed to 4.6 per cent — a four-year high — and both vacancies and payroll growth have slowed under the weight of rising payroll taxes and still-high interest rates.
Despite recent wage growth outpacing inflation for the first time in years, expectations of real pay rises remain low. Only 25 per cent of older workers aged 55 to 64 believe they will receive a pay increase above inflation this year.
With consumer demand still fragile and real incomes under pressure, the findings are likely to intensify calls for the Bank of England to accelerate interest rate cuts to ease borrowing costs and boost confidence.
Markets are now pricing in a quarter-point rate cut as early as August, although the Bank has said it wants clearer evidence of cooling wage growth before making further moves.
Economists say the figures highlight the disconnect between headline indicators — such as GDP and inflation — and the real-life experiences of millions of workers. As Harrison put it: “We need a shift in focus from short-term fixes to long-term solutions that genuinely improve the financial security and quality of life of working people.”