Consumer confidence and financial wellbeing in May 2021
Consumer confidence increased substantially this month. Confidence in the future of the economy was +26 points in May, up from -2 in April.
4.4% of people reported being furloughed, working reduced hours or on enforced leave due to the crisis. The lowest proportion since the pandemic began.
The better outlook has yet to translate into noticeably lower levels of financial difficulty. 5.7% of people missed or defaulted on a housing, credit or bill payment in the previous month.
Consumer confidence booms as lockdown easing continues
Confidence in the future of the UK economy shot up in May. Half (52%) of people think things will get better over the next 12 months, and 26% think things will get worse, giving a net score of +26. This is one of the highest figures recorded since we began tracking consumer confidence in 2012, and a similar level has not been observed since April 2015, when confidence was at +22.
The boom in confidence in recent months follows several years of steady decline following the Brexit vote, and a severe downturn during the initial stages of the pandemic in 2020. The building levels of confidence are undoubtedly related to reduced infection, hospitalisation and death rates, easing lockdown restrictions and the success of the UK’s vaccination programme. This month’s survey went out just before the further easing of lockdown on 17th May 2021.
There has been mixed evidence on how enthusiastic consumers have been to return to normal now that restrictions are being lifted. However, a surge in confidence increases the likelihood that consumers will spend generously this summer - perhaps using a larger share of the additional savings they made in the past year.
Levels of financial difficulty have yet to decrease
The number of households whose income is being hit by the pandemic is falling. The proportion of people who are furloughed, on reduced hours or enforced leave due to the pandemic decreased to 4.4% this month, compared to 7% in April.
Consistent with what we’ve observed throughout the crisis, the decrease in those on furlough corresponds to an increase in the proportion in work, whilst the proportion who are unemployed has remained stable. This suggests that most of those who had their employment impacted by the pandemic are going back to work, as opposed to being laid off.
The increase in the proportion of people working as normal has yet to clearly translate into lower levels of financial difficulty. There was a decrease in the proportion of people who reported having missed or defaulted on a housing, credit or bill payment from 6.5% in April to 5.7% this month. However, the proportion reporting a missed payment has fluctuated in recent months, and 5.7% is still higher than the rate observed in the summer months of 2020.
38% of people reported having made one of a number of adjustments to cover essential spending in the last month, which include having cut back, used savings or borrowed money to cover essential spending. This was a slightly, but not significantly, higher rate than the 35% in April and there is no indication yet of a reduction in the proportion of people needing to take these measures.
Overall, the data this month suggests good news on the whole for UK consumers, as the hospitality and entertainment industries open up further, and a successful vaccine rollout helps boost consumer confidence. However, the instability in consumer confidence (particularly in the future of the economy) over the last 14 months demonstrates how susceptible it is to change as the situation with the pandemic changes. Factors like the increasing concern over variants of the virus could yet threaten this recovery in confidence.
The fieldwork was conducted by Yonder on behalf of Which between 12th and 14th May 2021. A nationally representative sample of 2,091 consumers was surveyed.
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