HOUSEHOLDS ACHIEVE £300 IN “LOCKDOWN SAVINGS” AS FINANCIAL CONFIDENCE SLOWLY INCREASES, BUT ANXIETIES REMAIN OVER INCREASED DEBT AND HIGHER COST OF LIVING ONCE LOCKDOWN ENDS
- The proportion of households worrying about making ends meet falls for first time from 20% to 19%
- 75% of households have managed to save money during lockdown, but long-term financial impact of pandemic remains a worry
- Proportion of people worried about visiting public places rises for the fifth week in a row to 54%
Embargoed until 00.01am on Friday 29 May 2020 – Green shoots are tentatively appearing for households’ financial confidence, with signs that the UK may have moved past its peak in financial anxiety for the short-term. According to comparethemarket.com’s Household Financial Confidence Tracker, the proportion of households who found it difficult to manage their household finances over the past week fell from 18% to 16%, the lowest level since the tracker began. The number of households who said they were not confident that they would be able to meet the demands of their household bills over the coming weeks also dropped for the first time – falling from 20 to 19% – having remained flat over the past five weeks.
The gap in financial confidence between those households with children at home and those without remains wide, but there are also signs of hope amongst this demographic. Only 23% of families with children at home said they struggled to pay household bills over the past seven days (down from 29% a week before) and only 26% said they were not confident about being able to meet future payments (down from 29% a week earlier).
Indications that short-term recovery in financial confidence could reverse when lockdown ends
Three quarters (75%) of UK households have managed to save some money during the lockdown period. On average, households say they have saved around £300 on day-to-day expenses, with the primary drivers including not going to restaurants (65%), not going to the cinema (51%), driving (51%) or commuting less (30%), and not paying membership fees, for example for gym memberships or TV sports packages (21%). A similar proportion (76%) of families with children at home have managed to save money during lockdown, with a noticeably higher average saving on day-to-day costs of £414.
Whilst these savings may help in the short-term, they are mainly temporary, and the research suggests that household finances could be badly impacted after the lockdown lifts. Nearly six in ten (59%) families with children at home think that the economic impact of the pandemic will have a long-term effect on their household finances (compared with 47% of families with no children living in the house). A quarter (25%) of households with children at home have had to dip into savings, 11% have borrowed from family and friends and 10% have taken on additional bank debt. Almost a third (31%) say they will have to cut back or make sacrifices for 6-12 months after the lockdown ends. Families with children at home are worried that the easing of lockdown could increase their costs, with a quarter (25%) of this group admitting that the reopening of schools and nurseries will put additional financial pressure on their finances.
Anna McEntee, Product Director at comparethemarket.com, said:
“We are starting to see green shoots of financial confidence from UK households, but the bad news still outweighs the good news - the savings households have managed to make during lockdown may offer some temporary respite however, when lockdown lifts, the cost of living will go back to previous levels, rainy day funds have been raided and borrowing will need to be repaid. People are still very worried about the long term hit their finances will take and this anxiety is especially pronounced among those with children at home and extra people to care for.”
Consumer concerns do not bode well for post-lockdown economy
Although there are signs that, in the short-term, UK households are becoming marginally more confident about their finances, they are also becoming steadily less confident about socialising and getting back into society. The number of people who say they would not feel confident visiting public places, such as restaurants, cafes, pubs and cinemas once they reopen, has risen for the fifth week in a row to 54% (up from 53% last week). Not feeling in control of their surroundings and therefore not enjoying themselves was the main reason for lack of confidence, cited by 45% of respondents across all age groups and 56% of those aged 65 and older.
Proportion who do not feel confident visiting restaurants, cafes, pubs and cinemas once they reopen
Anna McEntee, Product Director at comparethemarket.com, said:
“The government has announced more details on its timeline to reopen the country for business, but the nationwide hesitancy to get back out into society could have a significant impact on the UK’s economic recovery. Even if financial confidence is tentatively increasing across households, this will do little good for the wider economy if it doesn’t translate into the spending in retail and hospitality sectors which have been so heavily hit by the pandemic.”
Notes to editors:
comparethemarket.com’s Household Financial Confidence Tracker analyses on a weekly basis how the UK’s financial confidence is increasing or decreasing in response to the changes to our lives and finances as a result of the current pandemic.
Populus survey on behalf of comparethemarket.com of 2,061 UK adults between 22-24 May 2020
With the UK economy and household finances currently taking a hit due to the ongoing COVID-19 crisis, how confident, if at all, are you in being able to meet the demands of / pay your household bills?
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