Consumer confidence and financial wellbeing in June 2021
Confidence in the economy takes a hit this month, as the recent rise in cases delays the easing of restrictions
Missed payment rates increased this month, to one of the highest levels seen during the crisis
Confidence in the economy falters as the new virus variant threatens the end of all lockdown measures
Confidence in the future of the UK economy dropped this month, after having shot upwards in May. The +26 points recorded last month was one of the highest figures seen since we began tracking economic confidence in 2012. June, however, saw a drop to +5 as cases of the Delta variant of Covid-19 rose quickly in many areas of the country, leading the government to delay the full lifting of social distancing restrictions in England that was due on 21st June. Delays are also likely in Scotland and in Wales.
That being said, confidence in the future economy remains at a similar level to before the pandemic, and much higher than the lows seen in spring 2020. Furthermore, with the extension to restrictions in England only due to last another four weeks and all four nations continuing to move towards full reopening, the confidence lost this month could bounce back quickly if cases level off as hoped.
Meanwhile, confidence in both current and future household situations remains similar to last month, with the measure for current household finances still higher than before the pandemic.
Missed payment rates increased in June
In keeping with the high levels of confidence in current household situation, financial difficulty levels have remained fairly steady throughout the crisis, but are characterised by an uneven distribution between groups.
Whilst many consumers have been able to save more money during the pandemic, others have felt the brunt of the economic fallout. Low income consumers and employees that have been furloughed, put on enforced leave or given reduced hours during the pandemic are examples of groups that have been more negatively affected, with a greater need to make adjustments to cover essential spending, and higher missed payment rates. Whilst the continued extension of government schemes has provided a great deal of financial support to consumers, concern remains about how some of the worst affected groups will fare once this support is rolled back. The financial support offered to cover employee wages through the job retention scheme is due to be reduced from July, and support may not be extended in response to the delayed ending of lockdown.
June saw rates of missed payments on housing, bills, loans or credit cards creep up to 7.6%, one of the highest levels seen since the pandemic began. This is despite evidence of many consumers getting back to work as the number of people on furlough decreases and unemployment falls. Missed payment rates were higher in the furloughed group within the sample than among the sample as a whole. They were also higher among households with an income under £21,000 (13%). But missed payment rates were still at 7.5% for those still working, suggesting that groups other than those we usually expect may be feeling the pinch too.
Last month we highlighted the instability in consumer confidence (particularly in the future of the economy) over the last 14 months, and how susceptible this measure has been to changes in restrictions and Covid-19 case numbers at a given time. June has been no exception, with a drop in confidence happening alongside a rise in cases and the extension of restrictions threatening the recovery of confidence seen in recent months. Alongside this, missed payment rates have increased slightly and the scheduled reduction to financial support like the job retention scheme could lead to further increases if consumers’ incomes are still affected by the pandemic.
The fieldwork was conducted by Yonder on behalf of Which between 11th and 13th June 2021. A nationally representative sample of 2,084 consumers was surveyed.
If you have any questions or would like to find out more, please email Sophie Beesley at firstname.lastname@example.org