Worrying signs for Manchester as economic scar tissue builds up, research reveals.

Date published: 30 March 2022


Financial vulnerability in Manchester is reported to have risen dramatically as a result of the pandemic, with many areas struggling ever since, according to a leading think tank.  

The city experienced a financial vulnerability double dip when Manchester was shut down earlier than the rest of the country in Q4 2020. 

As UK households are hit by rising prices, the latest update to Lowell and Urban Institute’s UK Financial Vulnerability Index (FVI), the most up-to-date index on UK household financial health based on anonymized data from over 9.5m Lowell customer accounts provides unique insights.

It shows that there has been an unequal recovery from the pandemic with many cities, including Manchester, seeing only a limited improvement since Q1 2020. 

Manchester has experienced higher than average levels of financial vulnerability since well before the pandemic. In Q3 2017 the average level of financial vulnerability in Manchester was 4.2 points above the national average.

Levels of Financial Vulnerability rose dramatically during the first lockdown and rose again when Manchester was put into level 4 restrictions. The city has struggled to recover ever since with financial vulnerability barely down from peak levels. 

The Financial Vulnerability Index, a joint project between Lowell, one of the largest credit management companies in Europe, and the Urban Institute, a leading U.S.-based research organization, uses unique Lowell data and publicly available data to measure household financial vulnerability across the UK. 

John Pears, UK CEO of Lowell, said: “Right now, everyone’s talking about the increased cost of living, but the impact won’t be the same everywhere.

"There are lots of communities that still aren’t back to how they were before the pandemic, and they are being hit again. With rising energy and food prices, we hope that these areas get the support they need, or the Government run the risk of levelling down in some of our biggest cities.” 

Scar Tissue in Cities Drives Unequal Recovery – The Spring 2022 update to the Financial Vulnerability Index reveals that cities like Birmingham, Liverpool and Manchester are still grappling with the effects of the pandemic despite the recovery seen elsewhere. 

a)   Trapped in vulnerability – Liverpool, Birmingham, Leicester and Newcastle have also experienced this scarring effect. All of these cities have only seen an improvement in the -0.3 - 2.5 range in their financial vulnerability since the peak of the pandemic. Constituencies in Birmingham for example, like Hodge Hill, Lady Wood and Erdington have seen virtually no improvement since Q1 2021. 

b)   Demos Report: Cities should be on levelling up agenda – A new report from Demos, produced in partnership with Lowell, identified a number of areas subject to the ‘double whammy’ of high financial vulnerability and limited access to affordable credit. Many of these areas are in the towns identified as targets for levelling up, but a significant proportion are found in cities outside of London. 

c)   Inflation and Financial Vulnerability Converging –The Consumer Price Index inclusive of Housing Costs and FVI converged in Q3 2021 as the UK’s recovery from the pandemic continued. This sets the stage for rising inflation to drive up financial vulnerability in struggling areas. 


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