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COVID-19 financial fallout

July 2021

by Stuart Carswell

24% of the UK population feel financially worse off than before the pandemic

During the past year and a half, we’ve experienced a stock market collapse, unemployment, many deferring their mortgage payments – and paradoxically, a booming housing market, plus bulging savings accounts.

Analysis by the Bank of England [1] has identified 28% of households have seen income fall during the coronavirus (COVID-19) pandemic, rising to 66% among the self-employed. Spending has fallen further, even for those in work. The Bank estimates that 57% of households cut their spending in the early months of the crisis.

Underlying unemployment rate
  • By mid-November last year, a total of 9.6 million jobs had been furloughed under government support schemes, at a cost of £43 billion, while the underlying unemployment rate had risen to 4.9% [2].
  • Another study reveals that 72% of the UK population have concerns for their wealth and finances in 2021 [3].
  • The Health, Wealth & Happiness Index shows the financial strain the pandemic has wrought on some of the most vulnerable parts of society.
     

    The potential introduction of new taxes
  • 24% of the UK population feel financially worse off than before the pandemic. The figure rises to 27% for women, 35% for part-time workers and 37% for those on furlough. Just one in three Britons said they felt financially better off.
  • A quarter are fearful of bills rising, while 19% are wary of the potential introduction of new taxes.
  • One in five fear they might lack savings and 13% feel uncertain about a low-interest-rate environment.
     

    Re-evaluation of finances since the pandemic
  • More than half of the population (56%) said they have re-evaluated their finances, with a 76% peak among those aged between 18 to 34 years old.
  • A quarter of Britons said they have saved money since the outbreak of the pandemic and 12% have changed the way they save.
     

    Life insurance enquiries 250% increase
  • High earners and people in the 18 to 34 year age bracket are the two groups who have saved the most during the pandemic.
  • The study also found that enquiries for life insurance saw a 250% increase at the end of March 2020 as the first lockdown was announced.
  • Enquiries for protection saw a 400% surge in the same period but only 4% of the respondents said they had taken out life insurance.
     

    Roadmap for easing restrictions
  • Given the continuing vaccine rollout and roadmap for easing restrictions, the study anticipates a return to economic growth, with quarterly Gross Domestic Product (GDP) expansion of 4.2% expected in the third quarter of this year.
     
    If you have any concerns about your finances please speak with your financial adviser or contact us.
     

     


    Source data:
    [1] https://www.bankofengland.co.uk/bank-overground/2020/how-has-covid-19-affected-the-finances-of-uk-households
    [2] https://www.gov.uk/government/collections/hmrc-coronavirus-covid-19-statisticsv

    [3] LifeSearch study – index compiled with the Centre for Economics and Business Research (Cebr). Consumer research was carried out by Opinium Research between 5-12 March 2021 among 3,025 UK adults.

     

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