A new analysis reveals that nearly a third of Scottish households (32%) have no savings, a much higher proportion than the UK average of 23%, according to research from the University of Bristol.

The gap between Scotland and the rest of the UK is widening. In 2023, 29% of Scottish households had no savings compared to 26% in the rest of the UK. While the UK average has improved, Scotland has moved in the opposite direction.

The Financial Fairness Tracker, commissioned by the abrdn Financial Fairness Trust, has monitored around 6,000 UK households since the start of the pandemic.

Perilous situation

Among 880 surveyed Scottish households, 14% are ‘very worried’ about their financial situation over the next year. One in five (20%) are struggling to afford food and essentials. Additionally, 22% say they would need to borrow money if their income dropped by a third, compared to 18% in the rest of the UK.

Financial stress is also affecting health. Over a third (36%) feel they have no control over their finances, 35% report financial worries affecting their sleep, and 37% say their mental health is suffering as a result.

However, financial confidence has improved significantly since 2022. Back then, 39% of households lacked confidence in their finances for the next three months. That figure has now halved to 20%.

Closely linked

“As policymakers address low productivity, this data highlights that financial stress and poor well-being are closely linked,” the researchers state. “Tackling both is essential for economic growth.”

Having savings is crucial to handling financial shocks, such as a broken appliance or job loss. Without a safety net, unexpected expenses can push people into debt and high-cost borrowing.

The worrying trend is that Scotland is heading in the wrong direction, with fewer people having savings, while the rest of the UK is seeing improvement.