09Jul

One of the buzzwords used by the Money and Pensions Service is the ‘financial wellbeing’ of the nation, something that is of course rather strained at the present time.

MAPS comments that more than one-fifth (22%) of UK adults are struggling to pay their bills, including essential bills. More people are worried what the future holds – will they keep their jobs for example? This is inevitably having an impact on larger spending decisions.

The latest MAPS Financial Wellbeing report for June 2020 is not a single new survey, but a report that collects relevant data from various other sources.

In the Opinions and Lifestyle Survey, conducted by the Office for National Statistics, almost one- quarter (23%) said their household finances had been impacted in some way by Coronavirus. Other ONS work found 40% of adults reporting that the health emergency had resulted in some form of impact on their work situation, with 22% of those whose work situation had been affected saying they had been furloughed and 18% saying their working hours had been reduced. The ONS says 27% of the overall UK workforce have now been placed on furlough.

Amongst the lowest 10% of UK income earners, as many as one-third work in sectors that were partially or completely closed during the lockdown. For the highest 10% of earners, only 5% work in a business area that was forced to shut, as reported by the Institute for Fiscal Studies.

Only 13% of workers in the C2DE socio-economic groups were able to switch to home working with no loss of income when the crisis began.

YouGov report that one in nine (11%) of households are in serious financial difficulty, while another one in six (17%) say that they are struggling to make ends meet.

One in five (21%) of households are reported to have used their savings to pay their bills since the Covid-related financial pressures commenced, but for many, this is not an option. Covid-19 has exacerbated the already parlous state of the nation’s household finances, where 11.5 million UK adults (22% of the total) have less than £100 in savings. Almost two-thirds of people (63%) say they are saving less since coronavirus hit the UK.

In the absence of any significant savings, many will need to resort to credit in the current emergency situation. Ipsos Mori polling shows that:

  • 12% have used an overdraft and a further 11% are considering this
  • 11% have borrowed more than usual on a credit card, and 9% are considering doing this
  • 9% have sought loans from family/friends, with 8% considering this option
  • 5% have accessed a new credit card and 7% are considering doing so
  • 6% have requested mortgage payments be temporarily stopped, with another 9% considering a request of this nature
  • 4% have obtained a personal loan from a bank, with 8% considering this

Standard Life Foundation data shows that, in a four-week period at the height of lockdown in April, 19% of households in the UK used a credit card, overdraft or other borrowings to buy food and other essentials. This rises to 64% of those in the ‘serious financial difficulty’ segment.

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.