Household finances across the country appear worse than a year ago, as the number of households admitting they are ‘struggling’ has risen to 3.5 million, over 800,000 higher than in October 2012, according to the Legal & General MoneyMood Survey.

The research revealed that 18% of homes are now having difficulties in ‘making ends meet’ compared to just 12% a year ago.

John Pollock, CEO, Legal & General Assurance Society, said; “The reality of the UK today is that people are worse off despite the recovery in the economy, falling unemployment and lower inflation.

“The fact that household finances have taken a downturn over the last year is reflected in our MoneyMood survey.

“Not only are we seeing that over 800,000 more households are struggling to make ends meet compared with last year, but our latest research shows a fall in the number of homes who can afford to save compared to a year ago.

“Falling unemployment and lower inflation figures for October are welcome news but do not appear to be feeding through to stronger household finances.”

Although the number of homes which are struggling with household finances has risen significantly in seven of the 11 regions surveyed with the East Midlands and London recording the highest annual increases of 26.8% and 26.7% respectively. However, in the South East of England, East Anglia and Wales the number of struggling households has fallen since last year to 12.2%, 6.8% and 14.1%.

Pollock said: “The rising cost of fuel is likely to wipe out any benefits from falling prices for other goods and make balancing household finance even harder, especially for those with lower incomes. With one in three (34%) already saying they are in fuel poverty (based on the Govt. 10% indicator) the amount spent on fuel is likely to have a significant impact on how the less well off households cope with paying bills over the coming months.

“The East Midlands and London appear to be the regions most affected with one in four households who say they’re struggling to make ends meet.”