Table of Contents
Executive Summary
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- Impact of COVID-19 on household finances
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- Figure 1: Short-, medium- and long-term impact of COVID-19 on household finances, April 2021
- The market
- Overall, financial wellbeing has risen despite the pandemic
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- Figure 2: The Financial Wellbeing Index, January 2015-March 2021
- A record drop in economic output…
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- Figure 3: Annual percentage change in GDP, 2007-25 (forecast)
- …but the furlough scheme has limited the rise in unemployment
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- Figure 4: Quarterly unemployment rate, Q1 2008-Q1 2026 (forecast)
- The consumer
- Furlough saved finances for many, while remote working will shape the future of work
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- Figure 5: Impact of COVID-19 on employment and working patterns, February 2021
- A third of employees expect to look for a new job in the next year…
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- Figure 6: Likelihood to look for a new job in the next 12 months, February 2021
- …with money top of the list, but many other factors in play
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- Figure 7: Reasons to look for a new job in the next 12 months, February 2021
- Most incomes have remained stable since the start of the pandemic
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- Figure 8: Impact of COVID-19 on personal income, February 2021
- Spending cuts mean savings boosts, but not for all
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- Figure 9: Value of savings and investments, February 2021
- Two thirds have cut back on non-essential spending
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- Figure 10: Impact of COVID-19 on household debts and spending, February 2021
- Holidays are the most commonly deferred purchase…
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- Figure 11: Major purchases that consumers have put off as a result of COVID-19, February 2021
- …and top consumers’ post-pandemic priorities
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- Figure 12: Financial priorities when COVID-19 is no longer a concern, February 2021
Issues and Insights
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- One crisis, many outcomes; financial inequality set to widen…
- …producing opportunities at both ends of the market
- The experience economy is set for a strong rebound
The Market – Key Takeaways
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- Household finances have improved despite the pandemic
- The biggest fall in economic output on record
- Furloughs have saved millions of jobs
- Under-25s have taken the brunt of job losses
Household Finances
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- Households have experienced variable COVID-19 effects on finances
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- Figure 13: Short-, medium- and long-term impact of COVID-19 on household finances, April 2021
- Financial wellbeing has risen despite the pandemic…
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- Figure 14: The financial wellbeing index, January 2015-March 2021
- …but lower incomes mean consumers are more likely to feel worse off
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- Figure 15: Changes in household finances, January 2015-March 2021
- Confidence has recovered after a sharp hit from the initial COVID lockdown
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- Figure 16: The financial confidence index, January 2015-March 2021
- Learnings from the last recession
Financial Activity
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- Financial activity sank as lockdowns cut off spending opportunities…
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- Figure 17: The financial activity index, January 2015-March 2021
- …leading to record saving activity…
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- Figure 18: Monthly changes in household savings, January 2016-January 2021
- …and a sharp fall in borrowing
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- Figure 19: Monthly net consumer lending, by type, January 2016-January 2021
The Economic Impact
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- The biggest fall in economic output on record…
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- Figure 20: Annual percentage change in GDP, 2007-25 (forecast)
- …fuelled by a historic fall in spending
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- Figure 21: Annual percentage change in household consumption, 2007-25 (forecast)
- Prices dipped as consumption fell, and are forecast to stay under control
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- Figure 22: Average annual rate of inflation (CPI), 2007-25 (forecast)
The Labour Market
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- Unemployment is forecast to peak at the end of 2021
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- Figure 23: Quarterly unemployment rate, Q1 2008-Q1 2026 (forecast)
- Under-25s have taken the brunt of COVID-19 job losses
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- Figure 24: Change in number of employees on payroll, by age, February 2021 vs February 2020
- The number of working hours remains well below the pre-pandemic peak
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- Figure 25: Total actual weekly hours worked (people aged 16+), seasonally adjusted, November 2005-January 2006 – November 2020-January 2021
Regulatory and Legislative Changes
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- More than 11 million roles have been furloughed
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- Figure 26: Number of employments furloughed, time series, March 2020-February 2021
- Hospitality and retail have accounted for almost half of furloughs
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- Figure 27: Share of average monthly furloughs, by sector, March 2020-February 2021
- SEISS claims neared £20 billion by the end of January
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- Figure 28: Volume and value of SEISS claims, by grant, May 2020-January 2021
- Benefits enhanced to support the most vulnerable
- Payment holidays have seen millions through periods of reduced income
- Spending has been encouraged where possible
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- Figure 29: Use of the Eat Out to Help Out scheme, 17 August-4 September 2020
- Stamp duty relief kickstarted the housing market
The Consumer – Key Takeaways
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- Uneven experience of furlough and job losses will deeper inequality
- Spending cuts have led to excess savings
- Holidays are the most commonly deferred purchase…
- Making up for lost time in work and play
Impact of COVID-19 on Consumer Behaviour
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- COVID-19 concerns have followed the trend in case numbers
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- Figure 30: Mintel’s COVID-19 exposure anxiety and lifestyle impact index, 28 February 2020-22 April 2021
- Travel, leisure and clothing have seen the biggest falls in spending
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- Figure 31: Planned and actual financial activity, February 2020 vs March 2021
- Hygiene concerns and home dining boost household care and food
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- Figure 32: Changes to spending habits since the start of the pandemic, 1-12 April 2021
COVID-19 and Working Patterns
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- Furloughs have been concentrated among unskilled roles
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- Figure 33: Impact of COVID-19 on employment and working patterns, February 2021
- Younger, unskilled workers have been hit hardest by job cuts…
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- Figure 34: Agreement with the statement “I have lost a job (ie been made redundant or left a job for a reason that was not your choice)” since the start of the COVID-19 outbreak, by age, February 2021
- …while casual workers have lost the most hours
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- Figure 35: Agreement with the statement “I have reduced the number of hours I work” since the start of the COVID-19 outbreak, by type of working contract, February 2021
- Working mums have been put under greater strain
- The jobs market slowed down sharply last year
- Remote working is changing our cities…
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- Figure 36: Agreement with the statement “I have started to work from home/increased how often I work from home” since the start of the COVID-19 outbreak, by home region, February 2021
- …and could have significant implications for employers and workers
Future Employment Plans
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- A third of employees expect to look for a new job in the next year
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- Figure 37: Likelihood to look for a new job in the next 12 months, by age, February 2021
- Money is the biggest driver for job moves, but wellbeing is a key consideration
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- Figure 38: Reasons to look for a new job in the next 12 months, February 2021
COVID-19 and Income
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- Most incomes have remained stable despite the pandemic
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- Figure 39: Impact of COVID-19 on personal income, February 2021
- A squeezed middle
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- Figure 40: Impact of COVID-19 on personal income, by age, February 2021
- The pandemic has deepened income inequality
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- Figure 41: Impact of COVID-19 on personal income, by household income, February 2021
COVID-19 and Savings
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- Two fifths have at least £5,000 saved, but one in six have nothing
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- Figure 42: Value of savings and investments, February 2021
- A third have grown their savings since the start of the pandemic
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- Figure 43: Changes in levels of savings since the start of the COVID-19 outbreak, 4-12 March 2021
- Easy access savings have enjoyed the biggest boost
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- Figure 44: Impact of COVID-19 on the value of savings in different products, February 2021
COVID-19 and Household Debt
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- One in eight have applied for a payment holiday on unsecured credit
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- Figure 45: Impact of COVID-19 on consumer credit, February 2021
- Mortgage holidays have been widespread, but arrears are still rising
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- Figure 46: Impact of COVID-19 on consumer credit, February 2021
COVID-19 and Household Spending
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- Two thirds have cut back on non-essential spending
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- Figure 47: Impact of COVID-19 on household spending, February 2021
- Spending curbs most common amongst less affluent
- Consumers are most likely to have put off a holiday due to COVID-19
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- Figure 48: Major purchases that consumers have put off as a result of COVID-19, February 2021
- Many have put home ownership dreams on hold
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- Figure 49: Percentage of consumers who have put off a major purchase who have put off buying a home, by housing situation, February 2021
- Concerns over COVID-19 and education balanced by a challenging job market
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- Figure 50: Percentage of consumers who have put off a major purchase who have put off training/education, by age, February 2021
- Car sales are set to rebound but will be affected by changing habits
Post-pandemic Priorities
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- Holidays top consumers’ post-COVID goals…
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- Figure 51: Financial priorities when COVID-19 is no longer a concern, February 2021
- …especially among the over-55s
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- Figure 52: The impact of COVID-19 on household finances – CHAID – Tree output, February 2021
- Getting back to the small things is also highly valued
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- Figure 53: Spending priorities when COVID-19 is no longer a concern, by age, February 2021
- Saved up and ready to spend
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- Figure 54: Spending priorities when COVID-19 is no longer a concern, by value of savings and investments, February 2021
- Some savings habits will be retained
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- Figure 55: Saving priorities when COVID-19 is no longer a concern, by current financial situation, February 2021
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
- CHAID analysis methodology
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- Figure 56: The impact of COVID-19 on household finances– CHAID – Tree output, February 2021
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- Figure 57: The impact of COVID-19 on household finances – CHAID – Table output, February 2021
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