Consumer confidence and financial wellbeing in July 2021
Confidence in the future of the economy dipped slightly for the second month running. This is despite the further easing of coronavirus restrictions and may reflect that concern over rising case numbers is having a greater effect on confidence.
Missed payment rates remain high as one in thirteen people (7.7%) reported missing or defaulting on a housing, credit or bill payment in July. Rates are particularly high among younger consumers and those whose employment continues to be affected by the pandemic.
Confidence falls despite end to restrictions
Confidence in the future of the UK economy fell for the second month running in July, despite the survey running immediately prior to the lifting of coronavirus restrictions in England on the 19th (the fieldwork ran on the weekend of 16th-18th). The other UK nations have also seen restrictions ease, although to a lesser extent than in England.
For the first time in three months, more people said they were pessimistic about the future of the economy than optimistic. Previously, confidence has increased as restrictions have been eased, but this has coincided with falling case numbers and progress with the vaccination program. This month, the easing of restrictions has been accompanied by a rapid rise in covid-19 cases, and the drop in confidence suggests that lifting restrictions is not sufficient to boost consumer confidence whilst cases are on the rise. That being said, confidence in the future of the economy is still higher than pre-pandemic levels.
There was a slight drop in confidence in current household finances, but overall confidence in household finances remains fairly steady and is relatively high compared to historical levels.
Missed payment rates remain high
7.7% of consumers reported having missed or defaulted on a housing, credit or bill payment in July, the same level as in June and among the highest levels seen during the pandemic.
Missed payment rates stayed low when the pandemic first hit, at or below 5% for most of 2020. In recent months, the rate has jumped around between 4% and 8%, but there appears to be an upward trend. This could be related to the withdrawal of pandemic financial support schemes or the cumulative effect of the pandemic on consumer finances as low paid workers, who have less financial resilience, continue to bear the brunt of the financial effects of the crisis.
Younger consumers (18-29) and consumers in mid-adulthood (30-49) are most likely to report missing a payment, at 19%, whilst the rate was very low among consumers over the age of 65 (3%).
Missed payment rates are also much more common among people currently furloughed, working reduced hours or on enforced leave due to the pandemic. Of the 96 people in the sample who are in this group, 22 (equal to 23%) reported that they missed or defaulted on a payment in the last month.
These 96 people equate to about 5% of our total survey sample. This was the same proportion as in June, despite the job retention scheme currently being rolled back. From July 1st, the government reduced the proportion of an individual's wages covered by the scheme to 70%, with employers obliged to top up the proportion paid to 80%. The already high incidence of financial difficulty among these people may be a warning sign of worse to come once the job retention scheme finally ends in September.
Overall, severe financial difficulty seems to be increasing slightly, and could worsen as the pandemic continues and government financial support is reduced. The rate of virus cases shows no signs of slowing, damaging consumer confidence despite the lifting of restrictions, and increasing the likelihood of future restrictions if the situation continues.
The fieldwork was conducted by Yonder on behalf of Which between 16th and 18th July 2021. A nationally representative sample of 2,077 consumers was surveyed.
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