Struggling households predict 9-month road to financial normality
A record-high 30% of families with children at home are struggling to make ends meet.
Almost a third of families with children at home had difficulties paying their bills last week, as financial anxiety around COVID-19 continued to escalate.
Data from comparethemarket.com’s latest Household Financial Tracker shows a record-high 30% of this group struggled to meet financial obligations, up from 23% the week before.
The proportion of families with children who have concerns over making ends meet in the coming weeks was also up, to 27%.
Among the households who have suffered financially since lockdown began, nine months is given as the average expected time before things get back on track.
A long road ahead
In total, almost four in 10 (38%) UK households admit their finances have taken a notable hit in the wake of the pandemic – and there’s little optimism about an immediate rebound.
In order to get back on an even keel, this group say they’ll have to make significant lifestyle changes – with as many as 44% expecting the way they manage their outgoings to change.
Over half of families with children at home (51%) will actively bid to put more money away, compared with 43% of all households who say they’ll start saving more.
This finding perhaps reflects the fact that over a quarter (28%) of families with children have already dipped into rainy day funds, and 12% taken on more debt, just to get by during lockdown.
Other illuminating figures suggest 29% (35% of those with children at home) will cut back on luxury or discretionary items, while 18% will make a concerted effort to use less petrol (22% of those with kids).
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.”
Bleak signs for hospitality reopening
The Tracker also highlights a growing sense of nervousness around returning to pubs, cafes, restaurants – despite the Prime Minister’s announcement that many hospitality venues can reopen safely from July 4.
The number of those feeling uncomfortable about returning to such spaces actually leapt in the last seven days, from 52% to 58% – the highest level recorded yet.
And the picture is even worse for certain sub-sectors such as music venues, where 70% are unlikely to make a near-term return to, along with theme parks (66%).
Hairdressers (31%), art galleries (43%) and casual eateries (47%) have fewer people refusing to go back through the doors – with 22% of people desperate to book a haircut “as soon as they possibly can” – but still the outlook for most businesses looks less than rosy.
Anna McEntee 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.”