Consumer confidence and financial wellbeing in December 2020
Confidence in the future of the economy dipped again in December, continuing its fluctuating recovery since the low recorded in March at the beginning of the coronavirus crisis.
Confidence among consumers in their current and future household finances remains fairly stable. Confidence on their households’ current financial situation is still very positive (+40), while confidence in the future is unchanged from the previous month at a little below zero (-9).
Consumer confidence in the economy drops again
December saw a drop in consumer confidence in the future of the UK economy, to -57 after a sharp increase to -35 in November. The boost in November immediately followed positive news about potential vaccines for the coronavirus, but it appears that this increase in confidence was fleeting, as confidence dropped again this month, despite the beginning of vaccine rollout in the UK and the end of national lockdown on 2nd December.
Meanwhile, confidence in current household finances remains much more optimistic, having increased slightly to +40 in December compared to +32 last month. Confidence in future household situation remains at the same level as last month at -9.
Throughout the pandemic, confidence in household finances has proven to be less volatile than sentiment towards the whole economy. This may be because confidence in the future of the economy is more closely related to current events, while household finances have been protected by government support schemes, including the recently extended furlough scheme.
Financial difficulty remains at similar levels to recent months
The proportion of consumers who had made at least one of a number of adjustments to cover essential spending in the last month decreased slightly to 37% in December compared to 43% in November. Adjustments include having taken money out of savings, borrowed from friends or family or having taken out credit to cover essential spending. The proportion of consumers who reported having taken at least one of these measures has remained very constant since April, perhaps suggesting that government financial support and more generous forbearance measures have helped to keep household finances stable.
The proportion of consumers who had missed or defaulted on a payment was 6.3% in December. In the same period, the proportion who were currently on a payment holiday was 6.0% in December, down from 7.8% in November.
The fieldwork was conducted by Populus on behalf of Which? between 11th and 13th December 2020. A sample of 2,080 consumers was surveyed and weighted to be nationally representative according to a range of demographic characteristics.
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