Consumer confidence in September 2020
Consumers’ confidence in their personal finances remained fairly stable this month, with little change in the outlook on current and future household finances. Confidence in current household finances remains higher than before the pandemic.
Confidence in the future of the economy dropped this month and wiped out all gains from the previous month, perhaps reflecting concern over possible restrictions to combat the recent rise in coronavirus infections.
The proportion of those who are employed but not working as usual, for example furloughed, declined again, but was still 7% of all respondents and questions remain about what will happen to them once the job retention scheme ends.
Confidence in the economy takes a hit
Which?’s Consumer Insights September survey has found that consumer confidence in the future of the UK economy, which showed fleeting signs of recovery in August, has taken another hit. This confidence strengthened significantly last month, increasing by 17 points from -55 in July to -38 in August. However, this gain was entirely reversed in September as confidence dropped 22 points to -60.
This drop in economic confidence is likely related to the recent increase in coronavirus cases across the UK, as widely reported in the media. This is not as severe as the low of -79 recorded in April, shortly after the UK went into lockdown. However, this survey was fielded on the weekend of 18th-20th. This was just before the briefing by the government’s scientific advisers on Monday 21st September, and the Prime Ministerial address on 22nd September, which outlined new advice and restrictions on certain activities. These include advice to work from home where possible, and pub, restaurant, bars and takeaway opening hours restricted to no later than 10pm. These recent restrictions will have an economic impact, particularly in the hospitality sector, and confidence may already be even lower than our survey found.
In contrast to sentiment towards the economy as a whole, confidence in personal finances remained fairly strong this month. Consumers’ confidence in their future households finances remained at around the same levels as before the pandemic, and confidence in current finances higher than before the pandemic. As explored in previous months, this may be linked to an increased ability to save money during the pandemic.
In summary, confidence in the economy is looking uncertain, with further changes likely as restrictions are put in place to slow the recent increase in Covid-19 infections. Confidence in household finances remains high, but could change as less support is given for job retention, further redundancies are made and more restrictions are put on certain industries.
An estimated 7% of people are still not working as usual
Similarly to our update last month, the proportion of workers who are furloughed, on reduced hours or enforced leave as a result of the pandemic has been decreased in September and the proportion working as usual increased to reflect this. The proportion of consumers in the furloughed group decreased by 2%, while the proportion working as usual increased by 2%. This gives an encouraging indication that those no longer in the furloughed group have returned to work as opposed to being made redundant.
Although this group has shrunk significantly from 22% of all respondents back in April to 7% now, this still represents a large number of consumers in the UK. Those 7% of the UK overall make up 14% of workers in our survey sample (excluding self-employed). They face uncertainty as the job retention scheme approaches its scheduled end in October, and restrictions on business start to tighten again after relaxing over the summer. The chancellor this week revealed plans for support after the job retention scheme ends, the ‘job support scheme’. This will involve a much lower government subsidy to employers to retain staff with shorter hours due to reduced demand caused by the pandemic. It will also be limited to ‘viable’ jobs that are still needed and not only retained due to government subsidy.
As previously explored via our tracker survey, those in the furloughed group are considerably more likely to be experiencing financial difficulty compared to those still working as usual. This finding holds this month for those still in the furloughed group, with 10% having defaulted on a payment compared to 4% of those working as usual, and 64% having made at least one of a number of adjustments to cover essential spending, compared to 46% of those working as usual. Given that this group is already experiencing increased financial difficulty, the situation could worsen as government support for keeping jobs is cut back considerably.
In July, we highlighted this uneven impact of the pandemic and questioned what may happen to those using the job retention scheme as it is phased out. Now, we are a month away from the scheduled end of the job retention scheme and restrictions that had previously been relaxed are being tightened again to prevent a second wave, potentially leaving a significant minority of workers in a vulnerable position, and increasing the possibility of future redundancies.
Published on 25.09.2020
The fieldwork was conducted by Populus on behalf of Which? between 18th and 20th September 2020. A sample of 2,112 consumers was surveyed and weighted to be nationally representative according to a range of demographic characteristics.
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