British households' financial situation is now the most precarious since the depths of the COVID-19 pandemic in the second quarter of 2020, due to a surging cost of living, a survey showed on Wednesday.

Pensions company Scottish Widows, part of Lloyds Banking Group, said 60% of households had been unable to save more during the pandemic, and that those households which had savings were now running them down at the fastest rate in nine years.

"Over 70% of households will need to eat into their savings in the next 12 months in order to meet their growing expenses," Emma Watkins, a managing director at Scottish Widows, said.

British consumer price inflation hit a 30-year high of 6.2% in February and the government's budget watchdog forecasts it will peak at a 40-year high of 8.7% towards the end of this year, due to surging energy costs and broader price rises.

The budget watchdog also said the fall in real incomes would be the greatest since records began in 1956 as wages failed to keep pace with prices.

Polling company Ipsos MORI surveyed 4,500 people aged 18-64 between Jan. 27 and March 8 for Scottish Widows.

(Reporting by David Milliken Editing by William Schomberg)