‘Counting the Pennies’: UK Citizens Turn to Cash to Manage Budget in Cost of Living Squeeze

As the cost of living crisis tightens its grasp on UK households, personal cash withdrawals have increased by almost 8 percent month-on-month and by almost 20 percent year-on-year, according to the Post Office.

People across the UK are increasingly turning to cash to have more control over their spending amid the cost of living crisis, research by the Post Office has revealed.

An overall £801Mln ($969Mln) in personal cash withdrawals were handled by Post offices at its 11,500 branches across the UK in July, which marked an increase of nearly 8 percen month-on-month and 20 percent year-on-year.

This is the largest amount since records began five years ago.

“Our latest figures clearly show that Britain is anything but a cashless society. We’re seeing more and more people increasingly reliant on cash as the tried and tested way to manage a budget. Whether that’s for a staycation in the UK or if it’s to help prepare for financial pressures expected in the autumn, cash access in every community is critical,” Martin Kearsley, banking director at the Post Office, was cited as saying.

Furthermore, more than 600,000 cash pay-outs for people eligible to receive energy bill support from the government were processed by the Post Office in July.

Cash deposits also rose, the research showed. £1.35Bln in cash was deposited by individuals in July, up 2 percent month-on-month, and business cash deposits rose by 1.9 percent from a month earlier.

Previous research by the Post Office revealed that 71 percent of Brits planning a ‘staycation’ - a holiday in the UK this year - intended to take out cash.

According to Natalie Ceeney, chair of the Cash Action Group, people are "literally counting the pennies" as they face soaring prices. Ceeney, who recently chaired the government's independent Access to Cash review, added:

"It's absolutely because of the cost of living crisis. People will be taking out cash and physically putting it into pots, saying 'this is what I have for bills, this is what I have for food, and this is what's left'."

With rocketing energy prices, the media has cited figures which show that more than four million UK households will spend a quarter of their net income on energy, with more than three million spending 30 percent of their income on bills.

Gas, accounting for about 45 percent of electricity supply has risen 400 percent in the past year, according to the ICE futures market. UK inflation hit a 40-year high of 9.4 percent in June and is forecast to continue rising. The Bank of England's Monetary Policy Committee (MPC) on 4 August offered a gloomy economic forecast, suggesting inflation would hit 13.3 percent in October, plunging the UK into a 15-month recession.