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Consumer confidence and financial wellbeing in September 2021

Summary

  • Confidence in the future of the economy fell sharply in September and back into negative territory as more people are pessimistic than optimistic. 

  • All of our measures of consumer confidence are close to pre-pandemic levels following a boom in the first half of 2021.

  • The proportion of people who reported they are furloughed, on reduced hours or enforced leave due to Covid-19 continued to creep downwards as the Job Retention Scheme approaches its end. The proportion who said they are working as usual rose more sharply. It has increased from 32% of all respondents at the start of the pandemic to 51% now.

Consumer confidence dropped in September

Confidence in the future of the UK economy dropped to -19 in September as 47% of people thought it would get worse over the next 12 months, whilst 28% thought it would get better.  This was a significant fall from +1 in August and a peak of +26 in May.

This drop in confidence could be related to a number of different factors. For example, the government had recently announced an increase in national insurance contributions and ONS data covered in the press on the day this survey was fielded suggested a slowing of economic growth in July.

Meanwhile, confidence in household finances remains more stable, with confidence in future household finances remaining the same as in August at +1. Confidence in current household finances decreased slightly from +36 in August to +30 in September. 

All of our measures of consumer confidence are now close to their pre-pandemic levels.

More people return to work and financial difficulty rates remain stable

The fall in confidence comes despite more people returning to work in September. As the Job Retention Scheme nears its conclusion on 30 September, the proportion of all UK adults in our survey who said they were furloughed, on reduced hours or enforced leave due to the crisis fell to just 2%. This compares with 22% in April 2020. The proportion of people who say they are working as normal has had an equivalent increase from 32% at the start of the pandemic to 51% now.

In September, the proportion of consumers who had missed a housing, bill, loan or credit card payment in the past month increased to 6.2%. This follows a significant drop in the missed payment rate to 4.5% in August. 

Although higher, this month’s missed payment rate is close to the average rate for the preceding 6 months which was 6.3%. Furthermore, the proportion who had made some kind of adjustment to cover essential spending (e.g. borrowing money or using savings) was also in line with recent months, at 42%.

That said, higher levels of financial difficulty are observed among certain groups of consumers. Households with low incomes were twice as likely to have missed a payment in the last month: 10% of households with an income up to £21,000 had missed a payment compared to 5% amont the rest of the sample. Furthermore, our own data has suggested that lower income households are more likely to have been negatively affected by the crisis in terms of their ability to save money. 

October will see a withdrawal of support for lower income households as the £20-per-week boost to Universal Credit comes to an end. This could add pressure to a group that is already more likely to be experiencing financial strain, with charities such as Citizens’ Advice warning that the withdrawal of this boost will push a large number of households into debt.

Contact us

If you have any questions or would like to find out more, please email Sophie Beesley at consumerinsight@which.co.uk

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