Many UK residents would be unable to live off their savings while they sought a new job after being made redundant, a new study suggests.

According to financial services provider Egg, only half of all Britons would be able to last four months on their savings alone if they were fired or left their job. The group asserts that 16 weeks is the average length of time it takes for people to move from one employer to another following redundancy. The group identifies that the minimum amount consumers would need to spend each month is 1,077 pounds, with many people said to have savings falling well short of the 4,308 pounds need to cover the period of unemployment. In such an instance, it is possible that UK residents may have to resort to personal loans or other forms of borrowing to meet the costs of living.

The group asserts that a further 52 per cent of Britons do not have the funds to support their families in the event of redundancy, while a quarter of people stated they have little or no money set aside for emergency situations. The figures led the group to assert that for many people, failing to plan for the unforeseen could trigger a “financial time bomb”.

Tobias van der Meer, head of consumer banking and investments at Egg, said: “As a rule of thumb, it has long been considered sensible for families to have cash savings of at least three months income, for any of life’s emergencies. However, our research highlights that far from being a precaution, these savings are a necessity, with two-thirds of people likely to need quick access to a lump sum [in] an emergency. The best way to ensure a savings pot goes as far as possible [in] any emergency is to make certain the deposit account pays a high rate but also allows easy access.”

Even when people cut out additional luxuries, respondents to the study said they would need an average of 1,077 pounds to meet the costs of personal loan and credit card repayments, food, utilities and fuel expenditure. Meanwhile, those living in the south-west said they would need at least 1,476 pounds to meet monthly financial obligations. Residents in Scotland expected that monthly outgoings would be around half that figure, with respondents in this area stating that a minimum of 744 pounds would be necessary.

In addition to these everyday costs, the Egg study also examined the effect that unexpected emergency situations had on overall finances. The group found that more than two-thirds of people (69 per cent) have needed a cash injection to meet the costs of things like vehicle breakdown, home repairs, healthcare or fines. For those who have found themselves faced with increased financial responsibilities recently, taking out a personal loan may help to cover the costs of motor or home repair quickly and effectively.

Elsewhere, it was reported last month by Equifax that an increasing number of Britons are finding it difficult to get on the property ladder, with 28 per cent of potential buyers stating that they were unable to raise the funds for a deposit on their dream home.

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