The UK lockdown to tackle the spread of Covid-19 has led to the largest economic contraction on record – 20.4% in April. A quarter of firms closed down, a quarter of employees have been furloughed and consumers have stayed home. Household spending dropped by 40-50% – the largest decline ever seen. Public sector net borrowing will reach nearly £300bn for 2020-21 as the Government provides support for businesses and workers, including in the form business loans, VAT cuts and the furlough scheme. While young workers and low income families are suffering most financially during this period, many have also reported finding it easier to make savings.
We heard from a woman in her 50s, living in London. She and her partner don’t live together, so they have been socially isolating separately, which she finds hard. She is currently furloughed, and says:
“…this has been a godsend. I would be seriously worried about money by now without it.
I am cooking from scratch more now and only shopping once per week. This has definitely lowered my grocery bill. Because I am not working, I am conscious of the money I am spending and so am doing less impulse buying and thinking more carefully about whether I really need something before buying it. I think this is a good thing and will be keeping it up even when I am working again.”
She is currently looking for a new job, and retraining for a new career in her newly found spare time. She says the new career will be less well paid, but more flexible. She also believes inequalities have increased during lockdown, but this can be remedied:
“I feel strongly that our key workers are underpaid and underappreciated. Clapping is nice but nurses, particularly, should be on a decent living wage. It’s become clear who is vital to our survival and economy and it seems very wrong that these people are also the lowest paid.
The gap between rich and poor has widened even more during the pandemic and it will surely become still worse in the months and years ahead unless we fundamentally change the way we value people and the way we measure the success of our country. I believe the government’s priority should be the wellbeing of its citizens, and the health of the economy should be a tool towards this rather than the desired outcome that people’s wellbeing is sacrificed for. During the pandemic, they have shown that this is possible. It just needs the will to continue.”
“I don’t feel as financially secure as I used to. We’re in the top 5% of the population in terms of income, but I can now see we could lose a lot. I thought we were 100% safe but we’re not… I am more worried about money than I am about catching Coronavirus.”
Woman, South East, 50s
“Most of my income is from self-employment and all of that has currently gone. I am receiving support from the government and have used a portion of my savings. My household spending is relatively low so I do not have immediate money worries.”
Man, 40s, East Midlands
“I started saving more. Although my job stayed the same, I’m uncertain about the future – there may be redundancies coming in a few months time. I feel the need for financial cushion… I find the uncertainty about my job quite worrying and tiring. Just keep thinking about what the next few months will bring and putting plans on hold.”
Female, 30s, North West
“For me it’s been an unimaginably stressful time – due to worries about my finances, not the virus. I’ve hardly thought about the virus.”
Woman, 40s, East of England