New research has revealed that the North East is the most financially vulnerable region in the UK with 21% of adults holding high-cost loans and 48% using credit.
It showed that in this region, since 2017, there has been a 3.5% rise in the share of adults using alternative financial products, increasing from 8% to 11.5%.
And researchers discovered a huge 69.9% of the North East adult population lacks emergency savings – the highest in the UK.
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The findings were revealed in the Financial Vulnerability Index, a joint project between Lowell, one of the largest credit management services companies in Europe, and the Urban Institute, a leading US-based research organisation.
It uses unique Lowell data and publicly available data to measure household financial vulnerability across the UK.
The North East had the highest measurement across four of the six components of the index, including the use of high-cost loans and credit and the lack of emergency savings.
At its highest point, in the second quarter of 2020, financial vulnerability in the North East was put at 59.8% - 12.8% higher than the UK average.
This vulnerability fell in the third quarter of 2020 but quickly resumed its steep rise and continues to outpace the UK average, according to Lowell.
John Pears, UK CEO of Lowell, said: “We are concerned about our nation’s financial health. With COVID support falling away, we can already see vulnerability ticking up.
"This has been rising since 2017 and we need to have an honest conversation about why. “There are real life systemic challenges and debt traps that are not being addressed.
"They are supporting vulnerabilities across the UK. Extremely low savings levels particularly contribute to low financial resilience in the North East. Income shocks can have an outsized impact.
"There is not one solution to this. The government is doing some good work to break debt cycles, piloting no-interest loan schemes.
"But there is more to do and we are working with others in our sector to help customers rebuild financial health over the long-term and build resilience for the future.”
