Half of UK adults expect finances to get worse due to COVID-19

According to the latest ONS figures on the impact of Coronavirus on household finances, almost half of the working age population have seen their work affected, with many seeing their hours cut, their workplace closed, being furloughed or losing their jobs. The knock-on effect is that almost a quarter of the population have already seen an impact on their household finances – with most seeing their income cut.

Already almost a third of those who’ve seen their income affected have had to dip into their savings in order to cover their basic living costs, such as food, bills and housing costs, while more than one in five people say they are struggling to pay their bills. What we’re seeing is just the start of the impact on people though, with almost half of adults saying they expect their finances to get worse over the next year. It appears they’re in it for the long-run, with two-thirds of the population thinking it will take four months or more for things to get back to normal – including a third of the population who think it will be longer than six months before normality returns.

The UK went into this crisis with a chronic savings deficit, with many households having little to no savings to fall back on if they saw their income hit. It means that any drop in income will have an immediate effect on lots of households, particularly if there are no big cutbacks they can make, and we’re already seeing the impact of this.

But it’s not just the working age population being hit, one in five of those who’ve seen their finances affected say it’s because their pension value has fallen due to the drop in stock markets. If you’re already in retirement and reliant on this pot you’re going to face a real cut to income too, or risk exhausting your pension pot sooner.

Those who have been unaffected so far are attempting to prepare their finances for tough times and recession-proof their money by using the current lockdown to save money and delay big purchases, like furniture or large appliances. Around 40% of people think they can save money at the current time, as they are confined to their homes and so spending on going out, travel and retail shopping has ground to a halt.

Take a look at the ONS figures here.

These articles are for information purposes only and are not a personal recommendation or advice.