Lockdown hitting hardest those already in financial trouble
By Dan Clay, Head of Newgate Research UK
As much of Europe and North America continues to re-open and look to resuscitate their ailing economies, the UK remains largely paralysed, with Government cautiously lifting a lock-down which the majority of the British public still support retaining.
This has been a brutal couple of months. The UK death toll from COVID-19 has now exceeded 35,000 – and the economic cost is counted in hundreds of billions. 7.5 million people have been furloughed – in many cases quite possibly a prelude to redundancy. The tourist industry is set to lose upwards of £37 billion just in 2020.
But who has been hardest hit? I don’t for one minute want to overlook or discount the very real pain that many people have felt, including those reading this now, but there are a group of people that have been disproportionately impacted, and will likely continue to feel the pain of this pandemic’s long tail.
Newgate Research recently benefited from colleagues at YouGov talking through the latest findings from their debt tracker, specifically looking at a deep dive into how UK consumers are managing financially in the wake of COVID-19. Perhaps surprisingly the nationally representative findings showed a significant decline in those who are financially distressed since the beginning of the global pandemic. i.e. there are fewer people who express they are struggling to keep up to date with bills and credit commitments. We are in the midst of the biggest contraction of the UK economy for decades. How can this be?
In short, those who are in more secure jobs are, at least in some measures, benefiting from the lock-down financially-speaking. The average UK employee spends around £145 per month commuting, £120 on lunch, and over £175 socialising. Lock-down has taken these costs out of the equation for many of us. However, in contrast, the YouGov research shows that on all measures, those who are currently financially distressed or indebted (around 20% of the population) are suffering much more than the rest of us. Over one-third had to economise on heating during the Spring cold snap due to the impact of COVID-19, almost one-third ate less than normal, and over one-in-five reduced the number of showers or baths. 37% of the population as a whole report some negative impact on household income as a result of COVID-19. Among those already in financial distress this jumps to 75%.
It’s a hypothesis, but my assumption is that many in this group are already living in some of the more financially disadvantaged communities, along which sits health inequality, denser living conditions and likely higher risk of contracting COVID-19. While everyone has and will feel pain from this pandemic I’d urge us as businesses, communicators and fellow humans to keep in mind the very real suffering that is playing out in many millions of households both now and likely in the years to come. Keeping in touch with public sentiment in this time is crucial.