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A fifth of Brits don’t know what a recession means

A fifth of Brits don’t know what a recession means

Millions of Brits may lack the financial knowledge to make the most of their money. Photo: Dominic Lipinski/PA Wire/PA
Millions of Brits may lack the financial knowledge to make the most of their money. Photo: Dominic Lipinski/PA Wire/PA

One in five Brits don’t understand what the word “recession” means, research suggests.

More than a fifth (22%) of UK adults told Raisin.co.uk Our research shows that more than a fifth (22%) of British adults are bewildered by financial terminology, putting them at a disadvantage in understanding and growing their money.

What’s more, two in five (42%) are concerned they’re not making the most of their money because they lack vital financial knowledge.

This rises to two in three (57%) of 23 to 34-year-olds – 56% of whom already have debt.

The term “effective annual rate” (EAR) – the return on a savings account, accounting for compounding interest – causes the most confusion, with 77% of people admitting they don’t know what it is.

READ MORE: UK economy faces ‘perfect storm’ as winter looms

However, words like “inflation” and “recession”, which appear frequently in the media – especially currently, during the COVID-19 pandemic – also confuse a fifth of people, with 19% and 20%, respectively admitting to not understanding what they mean.

This could potentially be leaving millions of Brits too ill-informed to sufficiently prepare for the financial impact of the coronavirus crisis, the study’s author noted.

Additionally, just 22% of adults feel they can turn to friends or family who work in the industry to help them understand the financial jargon, with only 15% speaking to their parents.

“The last 12 months have been incredibly testing for UK consumers,” said Kevin Mountford, co-founder of Raisin.co.uk.

“With multiple rate drops from the Bank of England, to wide-spread speculation of a recession and negative interest rates, there is a lot for consumers to process.

“The research clearly shows that people are too

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