New Research Shows Hidden Economy - With Two in Three Londoners "Informally" Lending This Year

New research lays bare the capital’s vast, undocumented lending economy - and the strain it’s putting on relationships

• 68% of Londoners have lent or borrowed money within their family or friendship group in the past 12 months — well above the 54% UK average

• Three in five informal loans in the capital were for £250 or more, a notably higher ticket than the rest of the country

• Nearly half of Londoners who lend or borrow informally have had a falling out

• Roughly three in four say they would use, or would consider using, a dedicated app to keep these arrangements clear

There is a financial system the City does not measure. It clears no trades, files no accounts, and sits on no balance sheet — yet in London it moves money through more households than almost any regulated product you could name. It runs on a WhatsApp message, a quiet word over dinner, a promise between people who already trust each other.

New research from Pebblio, a UK web application that helps friends and family formalise interest-free loans between themselves, suggests the capital’s appetite for informal lending runs well ahead of the national picture. More than two in three Londoners (68%) have lent or borrowed within their family or friendship group in the past year, against a UK average of 54%. The sums are larger, too: three in five London loans were for £250 or more, compared with under half nationally.

A bigger market, on a thinner paper trail

London’s higher cost of living shows up clearly in the data. Housing, childcare and the simple price of getting to work leave less slack in the monthly budget, and friends and family are absorbing the difference. More than a quarter of recent loans in the capital were taken to bridge a cashflow gap before payday — the kind of short-term pressure that elsewhere might fall to an overdraft or a credit card.

Yet the documentation has not kept pace with the sums involved. The majority of Londoners who lend or borrow informally rely on a verbal understanding alone, and roughly a third keep no record at all. For a £40 favour, that may not matter. For loans running into the hundreds or thousands — the norm in the capital — it is a meaningful exposure built entirely on memory and goodwill.

Where it goes wrong

The cost of that informality is plain. Nearly half of Londoners who have lent or borrowed informally have already experienced a misunderstanding over repayment — a forgotten amount, a different memory of the date, a sum that one side thought was a gift and the other thought was a loan. That is materially higher than the UK figure of two in five, and it tends to surface in exactly the relationships people least want to damage.

Among those who steer clear of informal lending altogether, the reasons are social rather than financial. The most common deterrent is fear of harming the relationship; close behind is the discomfort of having to ask for the money back. Londoners are not unwilling to help. They are unwilling to put a friendship or a family tie on the line to do it.

What people actually want

Asked what a tool for managing these arrangements should do, respondents were modest and consistent: a repayment schedule both sides can see, automated reminders so nobody has to play the heavy, and - for a growing share - a written agreement with genuine legal standing.

Roughly three in four Londoners say they would use, or would consider using, a dedicated app for exactly this. The demand is not for a new lender. It is for a clear record between two people who already trust each other.

Comment from Pebblio

Alex Postlethwaite, founder of Pebblio, said:

“London runs on informal lending more than anywhere else in the country, and it runs on bigger sums. Two in three Londoners have done it in the past year, and nearly half of them have had a misunderstanding over getting paid back. That is a lot of strain landing on the relationships people care about most.”

“What we see in the data is that this stopped being about emergencies some time ago. People are lending to cover the gap before payday, in a city where the gap is wider than anywhere else. They are doing it on a handshake, for amounts that really ought to be written down.”

“Pebblio exists to give two people who already trust each other a way to put it in writing properly, so the money does not get in the way of the relationship.”

Key London statistics

• 68% of Londoners have lent or borrowed money with friends or family in the past 12 months (vs 53.6% UK)

• 60% of recent London loans were for £250 or more (vs 47.6% UK)

• 48% of Londoners who have lent or borrowed informally have experienced a repayment misunderstanding (vs 39.4% UK)

• Roughly a third keep no record of the loan at all

• 74% of Londoners would use, or would consider using, a dedicated app to manage informal lending (December 2025 wave, London base n=159)