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Lockdown easing leads to fall in financial confidence

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Written by: Emma Lunn
21/05/2020
The easing of coronavirus lockdown measures has led to a significant fall in household financial confidence.

According to research by Compare the Market, a quarter (25%) of UK households feel that the Prime Minister’s announcement last Sunday outlining Government plans to gradually end the lockdown, made them less confident about their financial situation than they did before.

Only 13% said the news made them feel more confident, while the majority (61%) said the easing of lockdown made no difference at all to their outlook.

One in six (16%) said the announcement made them less confident about their employment prospects, although a similar number (15%) felt more confident about their job situation.

Half (50%) were unconvinced that the Government’s exit strategy could work. More than four in 10 (43%) said the plan to gradually end the lockdown did not seem realistic or achievable.

Adverse effect on household finances

Compare the Market’s findings revealed fears that opening up the UK will ultimately have an adverse effect on households’ financial prospects.

Eight in 10 (82%) people said they were worried that a gradual exit from the lockdown could cause a second spike in the virus which could have a more prolonged impact on their household finances. Four in 10 (40%) admitted they were “very worried” by this possibility.

Compare the Market has carried out a weekly survey – the Household Financial Confidence Tracker – for the past four weeks.

Nationwide, the proportion of households who are not confident that they will be able to keep on top of payments over the coming weeks has remained at one in five (20%) for the fourth week in a row.

However, cracks in household financial stability are starting to grow.

The number of households who say they have enough money to tide them over during the pandemic has dropped for the third week in a row to 65%, down from 67% last week and 69% the week before.

At the same time, the proportion who feel that their income is not sufficient to cover their outgoings has risen from 39% to 41%.

Family pressures

Families with children continue to bear the financial brunt of the lockdown, with 29% struggling to pay household bills over the past week (up from 28% the week before), and the same proportion (29%) concerned over their ability to cope financially in the coming weeks.

This compares with 18% of the general population who said they struggled financially over the past seven days.

One in 10 families with children at home said they have had to take out an additional credit card or personal loan. The same number admitted they had asked family and friends for money to tide them over.

Nearly a third (30%) of families with children at home wanted more information on additional financial help the Government could grant households.

Anna McEntee, product director at comparethemarket.com, says: “Households with younger families at home are clearly struggling to make ends meet, as the financial pressure as a result of the lockdown shows no sign of reducing. Despite the Government and many companies offering freezes or holidays on bills and debt repayments, this does not seem to be enough for families who have seen their income decrease.

“The Prime Minister’s plan to gradually reopen the UK economy seems to have resulted in no more than apathy among UK households, with most saying the announcement did nothing to improve their confidence around their finances, job or even their health. In fact, in many cases, the announcement has made people more nervous than they were before about getting back into society. The Government’s exit plan is a gradual one and only time will tell if it can successfully get the UK back up and running. For the moment, however, it seems households will be under significant financial pressure for some time to come.”

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