A new report by Lowell has revealed that 51% of households are expecting to be worse off financially due to Covid-19 – together with the fact that 93% of the UK had their pay date in December brought forward, meaning that 39% of households will struggle financially (an increase of 32% from last year).
Longer gaps between pay and the inevitably expensive Christmas period are set to take their toll on household finances. It is predicted that the 20th January 2021 will be the date that most households will start to struggle financially.
The date which falls on a Wednesday is still, on average, just over a week away from the January pay date.
Given the large percentage of households set to struggle this January, many in the UK will start to feel the financial strain prior to the 20th.
Commenting on the findings John Pears, Lowell UK Managing Director said “At Lowell, we realise the global pandemic has had a huge impact on many households.”
“Our recent report on the pressures of Christmas showed an increase from 2019 of people intending to use credit to fund Christmas 2020. This latest report shows households reaching out to credit providers yet again in January to counteract the struggles they face. The additional borrowing can create what feels like a never-ending cycle, increasing household debt every month which can become difficult to manage.”
SURVEY: When asked why they will struggle to cover the month of January, the report by Lowell revealed people’s top reasons as:
· Christmas spending will reduce disposable income (40%)
· The fact that it’s a longer month due to changed pay dates (22%)
· Pre-Christmas sales made me spend more (15%)
When asked how households plan to fund the long month of January, the top options have been revealed as:
|Funding option||% of households set to use this funding option in January 2021|
|Taking money out of my savings||17%|
|Pay day loans||9%|
|Borrowing from family or friends||8%|