Consumer confidence and financial wellbeing in November 2020
Confidence in the future of the UK economy increased significantly this month, perhaps prompted by encouraging news about vaccines emerging in recent days.
Confidence in household finances and financial difficulty levels remain stable, as government financial support schemes are extended during a second lockdown in England.
Consumer confidence improves
There was a significant improvement in November in consumer confidence in the future of the UK economy. A greater number of people now believe the economy will be better off in twelve months as this measure of confidence increased from from -66 in October to -35 in November. By historical standards confidence in the economy remains low, but it has recovered to similar levels as in the summer, when restrictions had eased significantly and virus cases were low.
This is perhaps surprising as virus cases are currently high in many areas of the UK, and many people are living under tight restrictions. However, since last month the Government has committed further support, such as the five month extension to the job retention scheme, and there has been positive recent news regarding potential vaccines for the virus.
This survey fieldwork began on 18th November, just 2 days after positive news regarding the Moderna vaccine and on the same day that encouraging results from the Pfizer/BioNTech vaccine trials were reported in the media. This may have boosted confidence that the economy will bounce back in the next 12 months as consumers are better able to see a way out of the restrictions placed on the economy to combat coronavirus.
Confidence in households' own financial situation remains fairly consistent with previous months, with no significant changes since October. The gap between confidence in current and future household finances remains large, but no doubt reflecting the continuing high levels of uncertainty.
Financial difficulty stays at similar levels to recent months
There were few significant differences in levels of financial difficulty compared to last month. This may reflect the continuation of financial support, such as the job retention scheme and payment holidays, that had been due to stop at the end of October, but which have now been extended
In November, 43% of consumers reported having taken one of a number of actions such as cutting back or using credit to cover essential spending in the last month. This was essentially the same as in October.
The proportion of people who reported defaulting on a housing, credit or bill payment in the last month in November was 5.2%. This is slightly lower than the proportion in October (5.7%) but higher than in September (3.8%). The slight decrease in the default rate was largely due to a decrease in the proportion who reported having defaulted on a loan or credit card payment (2.8% in October and 2.2% in November). However, the proportion who reported being on a payment holiday for a loan or credit card payment also increased slightly (4.2% in October to 4.7% in November), suggesting that the availability of payment holidays is important in keeping default rates down.
The fieldwork was conducted by Populus on behalf of Which? between 18th and 20th November 2020. A sample of 2,094 consumers was surveyed and weighted to be nationally representative according to a range of demographic characteristics.
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