Credit reference agency TransUnion is currently publishing weekly Financial Hardship Reports, showing the impact coronavirus is having on household finances in various regions of the world.
TransUnion says that:
“The COVID-19 pandemic is creating a new reality as its impact has stretched to consumers of all generations and income levels”, and that:
“The current global COVID-19 pandemic is creating major economic and financial distress for consumers across the globe. Many jobs in the UK economy are already being impacted or at risk due to drastic demand shifts.”
The UK reported an eye-watering drop in GDP of minus 20.4% in April, and many analysts predict that the UK economy will be the worst affected global economy, given that its Covid outbreak is one of the most severe and it’s economy relies heavily on the service sector.
The latest available UK report from TransUnion, at the time of writing, included data collected in the week commencing May 25. The proportion of UK households reporting a negative impact on their finances caused by the pandemic now stands at 61%, up from 53% on May 5. 73% of under-45s are reporting a negative financial impact, up from 62% on May 5.
Of those who haven’t suffered a negative impact so far, almost half say that it is possible their finances will be impacted in the future as the crisis continues.
(All subsequent figures relate only to those who have said their finances have been negatively impacted)
Almost three-quarters (72%) are worried about their ability to pay bills. This figure has risen from 60% in the space of one month. In the Greater London area, where living costs are often higher, 75% are concerned about this, up from 65%.
When asked to name the reasons for the negative impact, 43% of respondents said their working hours had reduced. 11% said they had already lost their job as a result of the crisis, and 12% said they were self-employed and that their business had “dried up”. 22% said they had been affected because their partner’s income had reduced through reduced working hours or redundancy.
Amongst affected consumers, their average budget shortfall was £527.60. 41% are concerned that they may not be able to pay their utility bills, 34% are worried about credit card repayments and 32% say they will struggle to make their rental payments.
More than half (51%) say they have cut back on discretionary spending since the start of the health crisis, almost one-third (32%) have cancelled subscriptions or memberships and almost one-quarter (24%) have reduced the amount they are saving for retirement.
Although the FCA has taken unprecedented action by instructing lenders in almost every sector to grant payment holidays to affected borrowers, a high proportion of people said they had not contacted any lenders to discuss payment options. This applies to 43% of Gen Z, 38% of millennials, 56% of Gen X and 65% of baby boomers.
Gen Z is generally considered to be adults who are currently aged 22 or under, millennials are those aged 23 to 38, Gen X is the 39 to 54 age group and baby boomers are aged 55 to 73.
One last concerning statistic is that more than one-quarter (27%) of impacted households believe they have been subject to a potential fraud attempt since the Covid saga commenced.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware of the facts, circumstances or legal position may change after publication of the article.