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Parents' struggle as bills hit a lockdown high and households predict a nine month road back to financial normality

Parents' struggle as bills hit a lockdown high and households predict a nine month road back to financial normality

Published: 03/07/2020
  • 30% of parents with children at home found it difficult to pay their bills over the past seven days – the highest level since lockdown began.
  • 44% of households expect the way that they manage household finances will change as a result of the pandemic.
  • Proportion of households uncomfortable visiting pubs, bars and restaurants leaps to an all time high of 58%, up from 52% last week.

Thursday 2 July 2020 – The number of families with children at home who are struggling to pay their bills during lockdown has leapt to its highest level. According to comparethemarket.com’s Household Financial Confidence Tracker, 30% of parents with children at home found it difficult to meet their financial obligations over the past seven days. This represents a seven percentage point rise from last week (23%) and the highest level recorded since the Tracker began ten weeks ago. Mirroring this spike in financial anxiety, the proportion of families with children at home who say they are not confident that they will be able to make ends meet over the coming weeks jumped to 27%, up from 23% last week.

UK households clearly believe that the damage done to their personal finances as a result of the coronavirus pandemic will take a considerable amount of time to repair. Nearly four in ten (38%) households feel their finances have suffered since the beginning of lockdown and, among this group, respondents said that it would take an average of nine months to get back on track financially.

In order to get their finances on an even keel once again, many people are needing to make meaningful lifestyle changes, with 44% expecting that the way that they manage household finances will change as a result of pandemic.

  • 43% of households say they will make an active effort to try and save more money – a figure which jumps to 51% amongst families with children at home.
  • 29% of households will reduce the number of luxuries or discretionary items they buy – jumping to 35% amongst families with children at home
  • 18% of households will make an effort to use less petrol – rising to 22% amongst families with children at home

As lockdown measures are eased, a substantial proportion of households will emerge with fewer savings and higher debt levels, and families with children at home are once again hit the hardest. 28% have dipped into savings (compared with 23% without children at home) and 12% have taken on more debt (versus 5% without children at home) in order to make ends meet over the past few months.

Anna McEntee, product director at comparethemarket.com, said:

The lockdown has had a profound impact on society and has clearly altered the shape of our personal finances. Many household budgets will be changed dramatically for the long term, with many people forced to make financial sacrifices and adapt how they spend. Households expect it to take the best part of a year before their finances return to how they were before lockdown. As the furlough scheme is slowly wound down, businesses will come under further financial pressure which could have a knock on effect on their employees. Even though this phase of lockdown is coming to a close, the second half of 2020 promises to be a real challenge for many people.

Anxiety about socialising in public hits highest levels – signalling slow recovery for the hospitality industry

As Boris Johnson announces the reopening of the economy, the signs are bleak that the public’s behaviour will revert back to pre-lockdown routine. The number of households who say they are uncomfortable visiting pubs, restaurants and cafes once they reopen this weekend has jumped to 58% (up from 52% last week) - the highest level recorded by the Tracker over the past 10 weeks. 50% of people say that they won't feel in control of their surroundings and therefore won't enjoy themselves.

Within the leisure, hospitality and entertainment industries, there are certain sectors which appear to face particularly acute challenges. Seven in ten (70%) say they are unlikely to visit music venues in the near term and two thirds (66%) say that they will avoid theme parks.The outlook seems brighter for hairdressers, art galleries and casual eateries, with only 31%, 43% and (47%) saying they do not plan to visit these businesses once lockdown is lifted. Almost a quarter (22%) said they wanted to book a haircut “as soon as they possibly can”, whereas less than one in ten (9%) said the same about going for a drink in the pub.

Anna McEntee, product director at comparethemarket.com, added:

Fears of a second spike of infection have made people very nervous about getting back out into society. For the hospitality and leisure sectors, which are poised to open this weekend, these figures will make uneasy reading. Businesses will no doubt be taking all precautions possible to ensure staff and customers are safe, but with consumer confidence apparently heading in the wrong direction, the road to economic recovery will be a bumpy one, especially for those sectors most severely impacted by the pandemic.

UK Household Financial Anxiety Over Time

Based on last weeks tracker, Money Mail asked us to help evaluate the cost of parents cutting hours and pay. We have included the calculation and source of wage data below.

  • Families who have to take a pay cut or reduce their hours are losing £131** a week in disposable income.
  • For households where both parents have had to take a pay cut or reduce their hours this amount could be twice as much.
  • The average amount of disposable income lost due to taking reduced hours is 23%.
  • 18%  of families with children at home say they have already taken a pay cut or reduced hours and 21% say they expect to.

Anna McEntee, product director at comparethemarket.com, said:

Childcare demands are leaving parents heavily out of pocket as they cope with the dual pressures or work and schools being closed. On average, parents who have to take a pay cut or reduce their hours could be looking at a 23% reduction in pay which in real terms could cost them around £131 per week. For families where both parents are facing cut backs, the financial impact could be twice as much. While for many this will be a short term worry, for some this will be a considerable strain on household finances.

Methodology: The 23% figure is from D550. The 18% figure is from D468 and the 21% figure is from D470.

**Average household disposable income is £29,600. 23% is £6,808 divided by 52 is £131.

https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householddisposableincomeandinequality/financialyearending2019#glossary

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 2,080 UK adults between 26-28 June 2020.

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