Consumer confidence and financial wellbeing in August 2021
More than half of consumers say they still feel uncomfortable attending a large indoor event or going on holiday abroad because of the risk of becoming ill with Covid-19, but younger people are much more likely to feel comfortable.
Consumer confidence changed little this month, bringing to an end the recent downward trend in confidence in the future of the economy.
The reported rate of missed payments decreased this month, from nearly 8% in July to 4.5% this month.
Many consumers continue to have concerns about the safety of certain activities
The significant easing of coronavirus restrictions in England on July 19th meant that consumers are now able to engage in nearly all the activities allowed before the Covid-19 crisis, albeit with some rules surrounding testing for activities like holidays abroad and large events. Rules have also eased in the devolved nations, although less so than in England.
A boom in consumer spending as restrictions ease could boost economic growth. However, the extent to which the most recent easing of restrictions might increase consumer spending is not yet known. Even if venues are open, some consumers may not return to their pre-pandemic activities if they do not feel safe.
We asked consumers how comfortable they do or would feel about engaging in different activities in terms of the risk of becoming ill with Covid-19. We found large differences between different types of activities. Whilst a large majority are comfortable with the idea of sitting outdoors at a pub or restaurant (76%) or having friends and family to visit inside their home (75%), it was a different story for going on holiday abroad or attending a large event. The majority of consumers (56%) were uncomfortable with both of these activities. Around the same proportion of consumers feel comfortable as feel uncomfortable about attending a large outdoor event or going to the theatre or cinema.
So far, most consumers are still taking precautions to prevent the spread of the virus. The wearing of face masks ceased to be required by law on 19th July in England (except on London public transport), although government advice is that they should be worn in crowded and enclosed spaces where people come into contact with others they wouldn't normally meet. Around two-thirds (63%) of English consumers who have been to shops since 19th July said they still always wear a face mask, as do 69% on public transport.
The data highlights the continuing safety concerns of consumers despite the ending of the majority of restrictions. Our survey indicates that there could be an uneven effect of this reticence on different parts of the economy, as activities like holidays abroad and large indoor events cause much more concern for consumers than other activities. Even within a sector, the impact will likely depend on the target market of an event or activity. Young audiences are much more likely to be comfortable with engaging in activities, with 44% of those aged 18-29 saying they would be comfortable attending a large indoor event, compared to just 10% of those aged 65 and over.
Consumer confidence remains stable
Consumers’ confidence in current and future household finances remained stable in August, with both measures at least as high as before the pandemic. Confidence in the future of the UK economy was also little changed, increasing just very slightly. This ended the trend of decreasing confidence in June and July.
Although coronavirus restrictions were eased significantly in July, this was accompanied by a sharp rise in coronavirus cases and concern among experts about the impact of easing restrictions on July 19th in England. The other UK nations also lifted restrictions around this time, although to a lesser extent. However, the data since then has somewhat allayed fears of a major resurgence in cases resulting from decreased restrictions, with daily cases falling from their mid-July peak and hospitalisations and deaths remaining fairly low.
In fact, two fifths (43%) of consumers said they feel more safe in terms of the risk of becoming ill with Covid-19 now compared to a month ago, whilst 47% said they feel no different and only 9% said they feel less safe. Feelings around safety are related to consumer confidence, with higher confidence in the future of the economy among those who feel more safe (+10) compared to those who feel less safe (-15).
Missed payment rates decreased from July to August
The proportion of people who reported missing or defaulting on a housing, bill or credit payment fell significantly in August. The previous two months have seen two of the highest missed payment rates recorded since the beginning of the crisis, nearing 8%. However, this month the rate dropped to 4.5%.
This substantial reduction is seen across consumer groups regardless of employment status, with those working as usual have a missed payment rate of 4.7% compared to 8.8% last month. The reason for this fall is unknown, but it takes the rate back towards what it was in the summer of 2020.
The decrease in financial difficulty is welcome at a time when the Job Retention Scheme is being rolled back. Only 3.5% of our sample in August reported still having their income affected by Covid-19 because they are furloughed, on reduced hours or enforced leave compared to those working as usual. This was down from 4.6% in July.
We have previously reported on the consistently higher missed payment rates among these consumers and there has been speculation that the closure of the Job Retention Scheme at the end of September will increase financial difficulty if people are made unemployed. The news that it is older workers who have been less likely to come off furlough might indicate that some of those who are still on the scheme may move straight into a delayed retirement.
It may be that other changes to support, in particular the withdrawal of the £20-per-week boost to Universal Credit, have a greater impact on levels of financial difficulty in the coming months.
The fieldwork was conducted by Yonder on behalf of Which between 11th and 13th August 2021. A nationally representative sample of 2,075 consumers was surveyed.
If you have any questions or would like to find out more, please email Sophie Beesley at firstname.lastname@example.org