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Public attitudes
Income, savings and debt

The economic insecurity trap

Financial insecurity is self-reinforcing. Setbacks mean reduced planning and saving, and increasing unemployment, income loss and housing costs. Financial vulnerability is persistent and widespread and not limited to people in poverty. Policy-makers need to tackle it.

Written by:
Nuffield Politics Research Centre
Date published:
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1. Introduction

Economic insecurity is a familiar experience for millions of households. It reflects people's concerns about whether they and their families have sufficient financial resources to meet current commitments and cope with future uncertainty. These concerns extend beyond income alone. They include worries about employment, savings, debt, housing costs and the ability to withstand unexpected financial shocks.

These concerns have become particularly important during a prolonged period of weak income growth, high living costs and subdued economic performance, with prolonged inflationary pressure reducing disposable incomes and savings, sluggish economic growth (House of Commons Library 2026), and widespread pessimism about the state of the national economy (Tims et al. 2026; YouGov 2026). Economic security is the important “breathing space” the new Prime Minister, Andy Burnham, referred to on the steps of Number 10 Downing Street on 20 July, the day he took office.

Against Britain’s economic backdrop, even households that are not in poverty may feel financially vulnerable if they lack savings, face insecure employment or have significant financial commitments. Understanding economic insecurity therefore requires looking beyond conventional measures of poverty household income, or prices.

Feelings of economic insecurity most acutely affect adults in mid-life (between 35 and 59) (Nuffield Politics Research Centre 2025a) due to a combination of economic stressors: mortgage payments, debts, insufficient income, low savings and childcare responsibilities, even for those in full-time work. Noticeably, economic insecurity is much lower in later life. Economic insecurity also tends to be higher, on average, among women, people with illnesses and disabilities, people with lower levels of education, those who rent compared to those who own their home, and people who are single as opposed to those in couples.

These experiences are likely to affect a broad range of choices in life and are linked with poorer mental health and lower levels of well-being (Kopasker et al. 2018; Rohde et al. 2016), as well as changing political attitudes and declining confidence in government.1 Yet relatively little is known about how economic insecurity develops over time. This report addresses that question. 

Rather than asking simply who feels economically insecure, we ask how and why over time people become more — or less — economically secure. We examine whether changes in people's financial circumstances are followed by changes in economic insecurity, whether economically insecure households expect different futures from economically secure households, and whether those expectations are borne out.

Our analyses use the JRF–Nuffield Economic Insecurity Panel Study, a nationally representative survey that interviewed approximately 8,000 adults in Great Britain on 3 occasions between March 2024 and April 2025. Because many respondents participated in all 3 survey waves, we can examine how changes in people's circumstances are related to changes in their reported economic insecurity. This is important: cross-sectional surveys can tell us, for example, that renters tend to feel less economically secure than homeowners, or that people with lower savings tend to report greater financial anxiety.

By following the same individuals over time, however, we can go further. We can examine whether becoming unemployed, losing savings or facing rising housing costs is followed by increased economic insecurity, while taking account of each person's earlier level of security.2 This longitudinal perspective also allows us to examine something that has received much less attention: whether economic insecurity itself has consequences for later economic experiences. Our central argument is that it does.

Households experiencing economic insecurity are not simply responding to current financial pressures. Their insecurity shapes how they think about the future, how they manage their finances and the financial buffers they are able to build. These responses are often sensible and understandable. When resources are limited and uncertainty is high, focusing on immediate needs rather than distant opportunities may be entirely rational. Yet these same responses may also make it harder to improve future financial security.

This report presents evidence that economic insecurity can become self-reinforcing. Financial setbacks increase insecurity, while insecurity is associated with shorter planning horizons and weaker financial buffers. Those weaker buffers leave households more exposed to future setbacks, which further increase insecurity. We refer to this process as the ‘economic insecurity trap’.

The remainder of the report examines the evidence for this argument. We begin by identifying which groups experience the highest levels of economic insecurity before examining how insecurity changes following major household economic events. We then explore the roles of expectations, financial planning and savings behaviour before bringing these strands together to demonstrate how economic insecurity can become a self-reinforcing process with important implications for public policy.

2. Who experiences economic insecurity?

We begin with a simple question: who is most likely to feel economically insecure? Figure 1 summarises how reported economic insecurity varies across different groups in the population. It compares people according to their employment status, income, savings, housing tenure, household structure, disability status, debt, ethnicity and gender.

Economic insecurity is measured by asking people: ‘How worried are you about your and your family’s economic security?’ where answers can range from 0 = ‘Not at all worried’ (maximum security) to 10 = ‘Very worried’ (maximum insecurity). To make the figures more easily interpretable, we have converted them into percentages by multiplying them by 10. This means that, for example, a score of 6.2 can be thought of as 62% insecure.3

Although economic insecurity is closely related to income, it is clearly about more than income alone, as we have shown before. People who are unemployed or otherwise out of work and not retired; those with the lowest incomes and low or no household savings; those in privately rented accommodation; parents (especially single parents); those with disabilities; and those with what we refer to as ‘bad’ debt obligations are all more likely to report economic insecurity. Insecurity is also higher on average among ethnic minorities and women.4

Importantly, these differences remain even after allowing for the fact that many of these characteristics overlap. For example, people with lower incomes are also less likely to own their homes and more likely to have low savings. Figure 1 therefore presents 2 sets of estimates. The first (in blue) simply compares different groups. The second (in red) adjusts for other characteristics that might also influence economic insecurity. Although the differences become smaller after these adjustments, the overall pattern changes remarkably little.

One finding stands out especially clearly. Differences in savings are associated with larger differences in economic insecurity than any other characteristic we examine. People with high savings report substantially lower insecurity than those with little or no savings. Prior to adjustment for other characteristics, the predicted average insecurity score ranges from a maximum of 68% among those with low or no savings, to 39% among those with high savings.

The message from Figure 1 is straightforward. Economic insecurity reflects the combined effect of people’s financial resources, financial commitments and exposure to risk. It is not confined to those on the lowest incomes, nor is it experienced by everyone on low incomes. Instead, it is concentrated among people whose financial circumstances leave them with limited room to absorb unexpected shocks.

Figure 1 identified the groups most exposed to economic insecurity. The remainder of this report asks a different question: why do people become more — or less — economically insecure over time?

3. The cycle of economic insecurity

The JRF-Nuffield Economic Insecurity Panel Study allows us to follow up on the same people every 6 months, so we can study how changes in respondents’ circumstances are reflected in changes in their reported economic insecurity. We can then see whether events such as unemployment, rising housing costs or declining savings are followed by increases in economic insecurity.

It also allows us to ask a second, central question: does economic insecurity itself predict what happens next? Are people who already feel economically insecure more likely to experience financial setbacks in the near-term future? If so, economic insecurity may not simply be a consequence of financial hardship. It may be part of a wider process that reinforces disadvantage over time.

Figure 2 illustrates the basic idea behind our analysis. Imagine someone who begins the study feeling moderately worried about their financial situation. During the following 6 months, they lose part of their savings or experience a reduction in their income. When interviewed again, they report greater economic insecurity. Over the next 6 months they become more pessimistic about their financial future. They postpone longer-term financial decisions, save less than they had hoped to and remain worried about future expenses. By the third interview, they report even greater insecurity.

Figure 2 presents this as a simple illustration, but it raises the central question of the report: does this pattern occur repeatedly across thousands of households? Our analysis suggests that it does. Not everyone follows exactly the same path. Many households experience unexpected improvements as well as setbacks. However, the evidence suggests that people who experience insecurity are, on average, more likely to experience circumstances that further reinforce that insecurity. This creates a cycle of economic insecurity.

The idea that disadvantage can become self-reinforcing is well established in research on poverty. People with very limited financial resources often struggle to invest in education, housing or other opportunities that would improve their prospects. Because they possess few financial buffers, unexpected setbacks such as illness, unemployment or rising living costs can have particularly severe consequences.

People who work in insecure jobs, who have more precarious incomes or who live in insecure housing situations are unable to buffer themselves from external events and are therefore at greater risk of falling into and then further into poverty (JRF 2024).5 These processes create what researchers often describe as a ‘poverty trap’. We argue that economic insecurity follows a related — but distinct — pattern.

The key difference is that economic insecurity is not simply about the amount of money people have today. It also reflects uncertainty about tomorrow. The associated concerns, as shown in Figure 1, are broader than just income. Households that feel economically insecure often face uncertain incomes, limited savings and significant financial commitments.

As a result, they are understandably more cautious in their financial decisions. This caution is often entirely rational. Someone with little savings cannot easily risk temporary income loss, invest money that may be needed for essential bills or commit to financial plans whose benefits may only emerge years later. Instead, attention naturally shifts towards managing immediate pressures. Short-term financial planning becomes more important than long-term planning, and maintaining day-to-day stability takes priority over building future financial security.

Paradoxically, however, these sensible responses may also make future insecurity harder to escape. Households unable to save regularly accumulate fewer financial buffers. Without those buffers, future shocks become harder to absorb. Greater exposure to future shocks increases economic insecurity still further. In contrast, households with stronger financial buffers enjoy the opposite dynamic. Savings make unexpected expenses easier to manage. Greater financial stability allows longer-term planning. Longer-term planning makes further saving and investment more achievable.

These households therefore become progressively more resilient to future shocks. The result is 2 contrasting trajectories. For some households, security gradually reinforces itself. For others, insecurity gradually reinforces itself. This report presents evidence that both processes are operating simultaneously.6

4. Why economic insecurity can become self-reinforcing

Economic insecurity is not simply a description of financial circumstances. It also influences how people make decisions. People who feel economically secure are likely more willing to think about the future. They may feel able to postpone current consumption, save regularly or make investments whose returns will only become apparent years later.

By contrast, people facing immediate financial pressures may have little choice but to focus on the present. This does not imply poor financial decision-making. When households face genuine uncertainty about paying next month’s bills, concentrating on immediate needs is often the most rational response available. The question is therefore not whether these responses are sensible — they frequently are — but whether they have unintended long-term consequences that could keep a person in a state of economic insecurity. If economic insecurity encourages shorter planning horizons and weaker financial buffers, it may inadvertently contribute to future insecurity.

Households with strong financial buffers can often plan years ahead. They may feel able to save regularly, invest for the future, change jobs to improve their career prospects or undertake further education. None of these decisions is risk-free, but households with financial reserves are better placed to absorb setbacks if things do not go to plan. For households experiencing economic insecurity, the situation is very different. When income is uncertain, savings are limited and household budgets are under pressure, attention naturally shifts to the immediate future. Decisions become dominated by the need to meet next month’s bills rather than next decade’s opportunities. In these circumstances, avoiding financial risks is not a sign of poor judgement — it is often the only sensible course of action.

When we refer to financial risk-taking, we do not mean gambling or speculative investments. Rather, we mean decisions that involve some short-term uncertainty in the hope of improving long-term financial security. These might include forgoing consumption now for better savings returns later, investing through a Stocks and Shares ISA, acquiring additional qualifications, moving to take up a better job, starting a small business or making other investments whose benefits may only emerge over time. Such decisions are much easier to make when households possess savings that can cushion unexpected setbacks.

If economic insecurity encourages households to focus more heavily on short-term financial management, it may unintentionally reduce their ability to build the resources that would improve their longer-term security. Economic insecurity therefore becomes part of a self-reinforcing cycle rather than simply an outcome of financial hardship.

Figure 3 examines whether we observe the first stage of this process. It compares people who describe themselves as economically secure (a score of 7–10 on the scale) with those who report high levels of economic insecurity (0–3). It examines 2 simple questions. The first asks whether respondents consider themselves willing to take financial risks. The second asks whether they generally focus on planning for the long term rather than the short term.7 The differences are striking. People who feel economically insecure are substantially less likely to describe themselves as willing to take financial risks. They are also much less likely to say that they generally plan for the long term.8

Most people, regardless of their financial circumstances, are naturally cautious about taking financial risks. Even among economically secure households, relatively few people actively describe themselves as risk-takers. Nevertheless, there is a clear gradient across the sample. As economic insecurity increases, willingness to take financial risks declines further. The same pattern is visible in long-term planning. Just over half of economically secure respondents say they generally focus on the long term. Among economically insecure respondents, the proportion falls markedly.

These findings are important because they suggest that economic insecurity is associated not only with fewer financial resources, but also with a different financial time horizon and attitude to financial risk-taking. People experiencing insecurity appear to devote more attention to managing immediate pressures and correspondingly less attention to longer-term financial goals. Importantly, these relationships remain even after allowing for differences in income, savings, education, housing tenure, age and a range of other characteristics. In other words, the differences shown in Figure 3 cannot simply be explained by the fact that economically insecure households have lower incomes or fewer assets.

Figure 3 therefore provides the first piece of evidence supporting the idea of an economic insecurity trap. Economic insecurity appears to be associated with financial attitudes that may also make it harder to improve future financial security.

5. A simple model of the economic insecurity trap

The diagram in Figure 4 brings together the ideas developed so far.

The model is deliberately simple. Financial setbacks — such as unemployment, falling income, declining savings or rising housing costs — increase economic insecurity. Higher economic insecurity encourages households to focus more heavily on immediate financial management and less on longer-term planning. This makes it harder to build financial buffers such as savings or other assets. Weaker financial buffers, in turn, leave households more exposed to future economic shocks. Those shocks increase economic insecurity still further. The result is a reinforcing cycle.

Importantly, this should not be interpreted as an inevitable process affecting every household. Many people experience temporary periods of insecurity before recovering quickly. Others experience unexpected improvements in income or employment that strengthen their financial position. Rather, the model proposes that, across the population as a whole, these relationships tend to reinforce one another. On average, households that begin in a stronger financial position become progressively more resilient, while those that begin in greater insecurity face higher risks of remaining insecure.

The remainder of this report examines whether the evidence supports each stage of this cycle. Specifically, we ask 4 questions:

  1. Do financial setbacks lead to higher economic insecurity?
  2. Do financially insecure households expect more difficult economic futures?
  3. Are those expectations borne out by subsequent experience?
  4. Does insecurity reduce households’ ability to build the financial buffers that would protect them from future shocks?

Taken together, the answers to these questions allow us to fully assess whether economic insecurity genuinely behaves as a self-reinforcing process.

6. Do financial setbacks lead to higher economic insecurity?

We begin with the first link in the cycle. Do changes in people's financial circumstances actually lead to changes in their feelings of economic insecurity?

Because our survey follows the same individuals over time, we can examine the effect of these changes while taking into account levels of economic insecurity reported in a previous panel wave. We can therefore see whether changes in circumstances lead to an increase or decrease in insecurity, controlling for their level of economic insecurity in the previous wave.

Figures 5 and 6 present the ‘marginal effects’ of changes in several economic circumstances on corresponding changes in a person’s predicted level of economic insecurity. We present 2 versions of each marginal effect, with and without controlling for a person’s level of economic insecurity in the previous survey wave.

Figure 5 illustrates the approach using one of the most important economic transitions: unemployment. People who become unemployed experience a substantial increase in economic insecurity (the blue bar). This finding remains and indeed strengthens allowing for the fact that people who become unemployed may already have been more economically insecure beforehand (the red bar).

In other words, unemployment itself is associated with a further deterioration in people’s feeling of economic security. This matters because it demonstrates that economic insecurity is responsive to changes in people’s lives. It is not simply a stable personality characteristic or, for example, a general tendency towards pessimism. People’s reported insecurity changes when their financial circumstances change.

Figure 6 broadens the analysis to a much wider range of life events. Some transitions represent positive developments, such as rising income or increasing savings. Others reflect setbacks, including unemployment or the onset of disability. Figure 6 examines how these different experiences are associated with changes in economic insecurity.

The overall picture is remarkably consistent. Negative changes generally increase economic insecurity. Positive changes generally reduce it. Among the strongest increases in insecurity are those associated with becoming unemployed and becoming disabled. Both represent substantial changes in household finances and future uncertainty, so it is perhaps unsurprising that they have particularly large effects.

Changes in household resources are equally important. People whose household income increases become less economically insecure. The same is true for those whose savings increase. Financial buffers matter independently of income alone. Parenthood is also associated with higher economic insecurity, although the estimate here is more uncertain than for unemployment or changes in income and savings. Becoming a parent often brings both greater financial commitments and greater uncertainty, so some increase in economic insecurity would be expected.

Not every transition produces measurable changes over the period covered by our study. For example, becoming a homeowner is not associated with a statistically reliable change in reported economic insecurity during the 18 months we observe. This does not necessarily imply that housing tenure is unimportant — Figure 1 showed that homeowners generally report lower insecurity — but rather that transitions into homeownership were relatively uncommon during our study period but may influence security over longer time horizons.

Taken together, Figures 5 and 6 demonstrate an important point. Economic insecurity responds systematically to changes in people's financial circumstances. This gives us confidence that our measure captures meaningful changes in people's lives rather than simply reflecting stable differences in outlook or personality.

7. Financial pressures matter even without major life events

Not every increase in economic insecurity follows a dramatic life event such as unemployment. For many households, financial pressure accumulates gradually. Working hours may be reduced. Rent or mortgage payments may rise. Savings may be used to cover everyday living costs. Borrowing may become necessary simply to meet essential household expenses. Each of these experiences represents an erosion of financial resilience. Figure 7 examines these kinds of pressures.

The pattern is again strikingly consistent. People who report reductions in working hours become more economically insecure. Those who need to borrow for everyday essentials also experience substantial increases in economic insecurity. Using savings to pay routine household bills has a similar effect. Although drawing on savings may be an appropriate response to temporary financial pressure, it also reduces the financial buffer available to a person or their household to cope with future shocks. Housing costs matter too. Households experiencing substantial increases in rent or mortgage payments report higher levels of economic insecurity even after accounting for their previous level of insecurity.

These findings reinforce an important theme running throughout the report. Economic insecurity is shaped not only by major life events but also by the gradual accumulation of financial pressures. For many households, insecurity grows because several relatively modest pressures occur at the same time. Individually, each may appear manageable. Collectively, they substantially weaken financial resilience.

The evidence presented so far points to 3 broad conclusions. First, economic insecurity changes as people’s financial circumstances change. Second, the strongest increases in insecurity follow events that reduce financial resources or increase uncertainty, including unemployment, falling income, declining savings and rising housing costs. Third, even comparatively modest financial pressures — such as reduced working hours or having to draw on savings for everyday expenses — can contribute to rising economic insecurity.

The next question is whether people experiencing higher insecurity also view their future differently — and whether those expectations prove to be accurate.

8. Do financially insecure households expect more difficult futures, and do they happen?

The previous section showed that financial setbacks increase economic insecurity. The next question is equally important: do people who already feel economically insecure face greater risks of future financial hardship? If they do, economic insecurity may become self-reinforcing. Households experiencing insecurity would not simply be responding to current circumstances; they would also be living with a genuinely higher likelihood of future financial difficulties.

We examine this question in 3 stages. First, we ask whether economically insecure households expect their financial circumstances to deteriorate. Second, we examine whether those expectations are associated with subsequent changes in economic insecurity. Finally, we test whether economically insecure households are, in fact, more likely to experience the financial setbacks they anticipate. Together, these analyses provide the strongest evidence in the report for the existence of an economic insecurity trap.

Economic insecurity is inherently forward-looking. People become worried not only because of their present financial circumstances, but because of what they believe may happen in the future:

  • Will they still have a job next year?
  • Will their income keep pace with rising prices?
  • Will housing costs continue to increase?
  • Will anyone be able to help if something goes wrong?

Figure 8 compares these expectations among economically secure and economically insecure households.

The contrast is striking. People who feel economically insecure are consistently more pessimistic about the future. They are less likely to believe that their employment prospects will improve. They are less likely to expect their income to increase. They are more likely to anticipate higher housing costs. They are also less confident that they could find another job if necessary or rely on financial support from the welfare system, family or friends. In other words, economically insecure households perceive themselves as having fewer financial buffers and facing greater economic risks.9

While not a surprise, this matters because expectations influence behaviour. Households that anticipate difficult financial circumstances are likely to make different decisions about saving, spending and planning to households expecting greater stability.

We next ask whether these expectations are associated with subsequent changes in economic insecurity. Figure 9 shows that they are.

When people become more optimistic about their future employment prospects, their expected income or the availability of financial support if needed, they subsequently report lower levels of economic insecurity. Conversely, increasing expectations of falling income, worsening employment prospects or rising housing costs are associated with higher economic insecurity. Although these effects are generally smaller than those associated with major life events such as unemployment, they are remarkably consistent.

This highlights an important feature of economic insecurity: it is shaped not only by what has happened, but also by what people believe is likely to happen. Future expectations form part of people’s current experience of financial security. But one important question remains. Are these expectations simply expressions of optimism and pessimism? Or do economically insecure households genuinely face greater future risks?

9. Are economically insecure households more likely to have financial setbacks?

This question lies at the heart of the report. Suppose 2 otherwise similar households differ in their level of economic insecurity today. Will the more economically insecure household actually experience more financial setbacks over the next 6 months? Our evidence suggests that the answer is yes.

For this analysis we avoid simply using feelings of economic insecurity as a predictor of things that may happen in the future, because people may feel insecure because of those predictions. Instead, we use a method that estimates a person’s likelihood of being economically insecure in one period (for example in Wave 2) based on their objective economic circumstances (those we know to be good predictors of economic insecurity), which we call a ‘propensity score’. We then test whether this propensity score — which captures each person’s likelihood of being insecure (a probability ranging from 0 to 1) — predicts negative economic outcomes in the future (for example in Wave 3). Appendix 2 explains this process in greater detail.

Figure 10 shows whether households whose circumstances make them more likely to experience economic insecurity subsequently experience higher rates of several important economic shocks.  That is, we look at whether those with a given predicted level of insecurity in Wave 1 of the panel experienced one of the negative shocks listed by Wave 2 (and similarly between Wave 2 and Wave 3). The results are consistent across all 4 outcomes we examine. Households at greater risk of economic insecurity are more likely to become unemployed. They are more likely to experience falling household income. They are more likely to lose savings, and they are substantially more likely to face increases in housing costs.

These findings are particularly important because they move beyond subjective perceptions and indicate that economically insecure households are not merely expecting worse outcomes — they are, on average, genuinely more exposed to them. This helps explain why economic insecurity can become so persistent. People who feel insecure are responding to real vulnerabilities rather than imagined ones. Their expectations are often well founded.

10. Why this matters

Taken together, Figures 8, 9 and 10 establish the second stage of the economic insecurity trap. Households experiencing economic insecurity expect greater financial risks. Those expectations influence their current sense of security. Crucially, many of those anticipated risks subsequently materialise. Economic insecurity therefore reflects a realistic assessment of financial vulnerability rather than simply a pessimistic outlook.

This also helps explain why insecurity may become difficult to escape. Households that repeatedly experience unemployment, declining incomes, rising housing costs or losses of savings remain exposed to the very circumstances that generated their insecurity in the first place. The cycle therefore reinforces itself. Financial setbacks create insecurity. Insecurity reflects genuine vulnerability. That vulnerability increases the likelihood of further financial setbacks.

We finally examine one particularly important example of this process: household saving. Saving provides perhaps the clearest illustration of how economic insecurity both results from — and contributes to — the accumulation of financial resilience over time. It addresses the final question we set ourselves — does insecurity reduce households’ ability to build the financial buffers that would protect them from future shocks?

11. The trap in action: savings

Throughout this report, we have argued that economic insecurity is both a consequence of financial hardship and a factor that may reinforce it.

Savings allow us to observe both sides of this relationship and provide perhaps the clearest illustration of the economic insecurity trap. Households with greater financial security save more, and households that save more become more financially secure. Conversely, households experiencing economic insecurity save less, making them more vulnerable to future insecurity.

Savings provide households with a financial buffer against unexpected events. They make it easier to cope with temporary income losses, unexpected bills or rising living costs without needing to borrow or cut essential spending. Unsurprisingly, households with greater savings tend to feel more economically secure. But we suggest that the relationship also operates in the opposite direction. Households experiencing economic insecurity find it harder to save, and, as we showed earlier, take a short-term view to their financial decision-making. Immediate financial pressures take priority, leaving little scope to build reserves for the future. Even when households may wish to save more, limited disposable income and greater uncertainty likely make this impossible.

The result is a feedback process. Lower savings contribute to greater insecurity. Greater insecurity reduces future saving. This makes savings an especially useful way of understanding how the economic insecurity trap operates in practice.

Figure 11 provides the first evidence for this relationship. It shows that insecurity is indeed strongly associated with having lower savings, measured (in Figure 11a) as the amount saved by a person and their household each month, adjusted (equivalized) according to the number and adult/child status of members of the household, and (in Figure 11b) as expectations of future savings over the coming 12 months.10

The differences between economically secure and insecure households are substantial. Around half of economically insecure households report having no monthly savings at all. Even among those that do save, the amounts are generally much smaller than among economically secure households. The contrast is equally clear when people are asked about the future. Economically secure households are considerably more likely to believe that they will increase their savings during the coming year. Economically insecure households are much less optimistic. Many believe they are unlikely to save more than they currently do.

These findings are important because they suggest that economic insecurity affects not only current financial resources but also expectations about future financial resilience. The inability to save is therefore not simply another symptom of insecurity. It is also one of the mechanisms through which insecurity persists. Importantly, these relationships are not confined to households living at or below conventional poverty thresholds. Similar patterns are observed among households at the middle-income level and above.11 The economic insecurity trap extends beyond those in poverty.

12. Which comes first?

The relationship between savings and insecurity raises an obvious question. Do people feel more secure because they have savings? Or do people accumulate savings because they already feel more secure? The evidence suggests that both processes occur simultaneously.

To investigate this, we examined how savings and economic insecurity influence one another over time. Rather than looking only at whether savings and insecurity are associated, we ask whether earlier savings predict later insecurity, and whether earlier insecurity predicts later savings.

Figure 12 summarises the results. As we have standardised both monthly household savings and economic insecurity, the size of these effects can be compared directly. For example, from Wave 1 to Wave 2, a 1 standard deviation increase in economic insecurity is associated with a 0.05 standard deviation decrease in the amount of savings that someone makes in the following wave. At the same time, a 1 standard deviation increase in monthly savings is also associated with 0.12 standard deviation decrease in one’s level of insecurity in the subsequent survey wave. Past savings exert a larger effect on subsequent insecurity than vice versa when looking at Waves 1–2, but in Waves 2–3 the effect sizes are comparable.

The findings are reasonably consistent. Households with higher savings subsequently become more economically secure. At the same time, households experiencing greater economic insecurity subsequently save less. In other words, the relationship runs in both directions. Savings strengthen economic security and economic security makes saving easier. Conversely, lower savings increase insecurity, while insecurity itself reduces subsequent saving. This reciprocal relationship is exactly what we would expect if economic insecurity operates as a self-reinforcing process: an economic insecurity trap.

The statistical relationships observed over each 6-month period are individually modest. However, they occur repeatedly. Small differences accumulating over many years can produce large differences in financial resilience. This is precisely how cumulative advantage — and cumulative disadvantage — develop.

13. From small changes to large differences

The importance of these relationships becomes clearer when considered over longer periods. Imagine 2 otherwise similar households. Both begin with comparable financial resources. One feels economically secure. The other feels economically insecure. Over the following year, the economically secure household continues to save regularly. The economically insecure household saves less. Initially, the difference may appear relatively small.

But over time those differences accumulate. Larger savings generate greater resilience to unexpected shocks and greater resilience increases economic security. Greater security makes continued saving easier. Meanwhile, the household that saves less remains more vulnerable to future setbacks, making further saving increasingly difficult.

Figure 13 illustrates the practical significance of these differences. In this analysis we take the average total equivalised household savings of someone who was economically insecure in March 2024 (Wave 1) and see by how much this average figure increased and decreased (regardless of any subsequent changes in their economic security) by April 2025 (Wave 3). We then subtract the equivalent change in savings for those who felt economically secure in Wave 1 of our survey.

The values in Figure 13 tell us, on average, how much less economically insecure respondents went on to save within a year than their economically secure counterparts. Negative numbers tell you that we predict that the insecure will have accumulated more savings than the secure between Waves 1 and 3.

After accounting for households’ initial financial circumstances and a wide range of demographic characteristics, people who reported high economic insecurity at the beginning of the study accumulated substantially less additional household savings over the following year than those who initially felt economically secure. The precise estimates vary depending on the statistical model used — from £8,623 to £4,197.12 The central finding does not. Economic insecurity today predicts weaker growth in financial buffers over the long term tomorrow.

We also find that the reduced ability to save among the insecure is not limited to those at the lower end of the income distribution. In Figure A4.3 of the appendix, we re-estimate this analysis, excluding those respondents whose household income puts them below the conventional poverty rate. In this sample, the insecure continue to save less (saving between an estimated £9,104 to £4,508 less, depending on the model), further demonstrating that the insecurity trap is not simply a poverty trap.

14. Conclusions: what have we learned?

This report began with a simple question: can economic insecurity become self-reinforcing?

Economic insecurity is usually understood as the consequence of financial hardship. People become economically insecure because they lose their job, their income falls, their housing costs increase or their savings are depleted. These experiences naturally generate anxiety about the future. But our study suggests that this picture is only part of the story.

Across a wide range of analyses, using a panel survey that follows the same people over time, we find consistent evidence that economic insecurity is also part of a dynamic process through which financial vulnerability can reinforce itself. Financial setbacks increase insecurity, but insecurity is also associated with behaviours and experiences that make future financial setbacks more likely. This is what we describe as the economic insecurity trap.

No single statistical analysis demonstrates this on its own. Rather, the strength of the evidence lies in the consistency and complementarity of the findings. Different analyses, examining different outcomes and using different statistical approaches, all point in the same direction. Taken together, they describe a coherent process through which economic insecurity can become increasingly persistent over time.

As part of this overall picture, we have established several important findings.

Economic insecurity is strongly associated with financial resources, but it cannot be reduced to income alone. People with lower incomes are more likely to feel economically insecure, but so too are those with little or no savings, insecure employment, unsecured debts, rented housing and disabilities.

Similarly, poverty and economic insecurity overlap, but they are not identical. Many households above conventional poverty thresholds experience substantial financial insecurity, while some households on relatively modest incomes report comparatively high levels of economic security because they possess financial buffers or face relatively predictable financial circumstances. Economic insecurity therefore captures something broader than material deprivation.

Economic insecurity is also clearly responsive to changes in people’s circumstances. Major economic events such as unemployment, declining income and falling savings are all followed by increases in economic insecurity. At the same time, smaller improvements in income or savings are also associated with increasing economic security. The gradual accumulation of financial pressures — reduced working hours, rising housing costs, drawing on savings to meet everyday expenses and borrowing for essentials — contributes to rising economic insecurity.

Economically insecure households are less likely to describe themselves as willing to take financial risks and less likely to report planning for the long term, even after taking account of income, savings and a wide range of other characteristics. When resources are limited, preserving financial stability today may be considerably more important than pursuing uncertain gains tomorrow.

Nevertheless, these perfectly reasonable and understandable responses may in turn have unintended longer-term consequences — they reduce financial resilience. If households are unable to save regularly or invest in future opportunities because immediate financial pressures dominate everyday decision-making, economic insecurity may become more persistent over time.

Perhaps the most striking findings in the report concern people’s expectations about the future. Economically insecure households consistently expect their financial circumstances to deteriorate more than economically secure households. They are more pessimistic about employment prospects, future income and housing costs, and less confident that they could rely on alternative employment opportunities or financial support if needed.

Crucially, these expectations are not simply expressions of pessimism. Households with a high likelihood of economic insecurity are also substantially more likely to experience subsequent unemployment, falling income, declining savings and rising housing costs. The economically insecure are not worrying unnecessarily. On average, they are correctly recognising that they face greater objective financial risks.

Savings provide a clear illustration of the dynamic we have described. Households with greater savings feel more economically secure. At the same time, economically secure households are substantially more likely to continue building savings over time. Conversely, households experiencing greater economic insecurity save less and expect to save less in the future. Over time, these relationships operate in both directions. Higher savings contribute to greater economic security. Greater economic security makes future saving easier.

This reciprocal relationship illustrates how relatively small differences can accumulate over time. Households that begin with stronger financial buffers become progressively more resilient to future shocks. Households with weaker buffers remain more exposed to financial setbacks, making it harder to accumulate the savings that would improve their future security. Savings therefore provide a particularly clear example of the economic insecurity trap.

All of this does not, of course, imply that everyone experiencing financial insecurity becomes trapped. Many households recover quickly following temporary financial difficulties. Nor does it suggest that economic insecurity is the product of poor decisions. The responses observed throughout this report are often entirely reasonable given the financial circumstances households face.

Our argument is about probabilities and unintended consequences. Across the population as a whole, households experiencing greater economic insecurity are more likely to encounter further experiences that reinforce their insecurity, while households with greater security are more likely to accumulate additional financial resilience. Over time, these small differences can accumulate and become substantial.

The evidence presented tells us that economic insecurity is part of a dynamic process through which financial resources, expectations, behaviour and subsequent economic experiences interact over time. Viewing economic insecurity in this way helps explain why it can persist even when households are not living in poverty, why financial insecurity is often concentrated among those facing uncertain rather than simply low incomes, and why relatively modest financial shocks can have lasting consequences.

The concept of the economic insecurity trap provides a framework for understanding these processes. Rather than treating economic insecurity solely as an outcome of financial circumstances, it encourages us to see insecurity as both a consequence of financial vulnerability and one of the mechanisms through which vulnerability can become self-reinforcing and persist. This is the key message of this report.

Taken together, the findings presented throughout this report describe a process rather than a single event. Financial setbacks increase economic insecurity. Economic insecurity encourages greater attention to immediate financial pressures and reduces opportunities for longer-term planning. Financial buffers consequently grow more slowly. Weaker buffers leave households more exposed to subsequent financial shocks. Those shocks reinforce economic insecurity. The cycle then begins again.

In order to help households break this cycle, policy-makers should focus on the kinds of short-term buffers — on the financial resilience — that help move the cycle in the opposite direction for those who experience economic insecurity. This, we have shown, may help them feel more optimistic about the future because they may indeed be less exposed to financial risks. Feeling optimistic and secure has a wide range of benefits to people and households, and it may also usher in greater optimism that has wider benefits in economics and politics too. A dynamic understanding of economic insecurity offers a useful insight into the kinds of outcomes that are desirable for both policy-makers and households.

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This report is part of the public attitudes topic.

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