ii comments on Covid-19 impact on UK household finances

Our expert comments on ONS research into how the pandemic is affecting UK households.

Just under a quarter of UK adults (23%) said the coronavirus was affecting their household finances, according to a poll by the Office for National Statistics (ONS) published today.

The most common concern among these adults was a reduced income (73%), while 33% said they had needed to use savings to cover living costs.

In addition, some 25% said they were unable to save as usual and 20% claimed their savings value is being affected.

When considering their economic future, 41% of adults expected their financial position to get ‘a little or a lot worse’ over the next 12 months. A similar proportion (42%) expect it to stay the same. 

Myron Jobson, Personal Finance Campaigner at interactive investor, says: “Fixing the roof when the sun is shining is a good adage that can apply to your finances. Unfortunately, it is not raining but pouring from a financial standpoint for many people amid the coronavirus pandemic - particularly those who have been made jobless, people facing reduced working hours and those who cannot work due to illness. 

“But what can people do now? With coronavirus likely to cause disruption for a significant amount of time this year, it is important to keep tabs on your finances and to consider protective steps you can take to avoid money worries later on. 

“Historically, having three months’ worth of salary stashed away to ensure you can stay financially afloat in a disaster was a good rule of thumb, but given the ongoing uncertainty over Covid-19, many people will want to double that.

“Those struggling financially should comb through their finances to see where they can save. It is worth checking with your energy supplier to see if they can offer any support or shop around to see if you can get a better deal.

“Those in financial constraints may be tempted to use credit cards and take out loans to plug financial holes and while the city watchdog has implemented measures to alleviate the financial burdens on those who have taken out credit products, consumers should remember that payment holidays will not constitute free money – you’d need to pay it back.

“Even after two emergency rate cuts and historic low interest rates, some forms of debt, can still be very expensive so it is important for people to explore all their options.” 

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