One in ten families has asked family and friends for money to pay household bills according to new research by comparethemarket.com. The findings were part of the comparison specialist’s Household Financial Confidence Tracker,
The company also says that the Government’s decision to start easing the nationwide lockdown has led to a pronounced drop in confidence among UK households. with a quarter (25%) of UK households feeling that the government plans to gradually end the COVID-19 lockdown, made them less confident about their financial situation than they did before. Only 13% said the news made them feel more confident and the majority (61%) said the easing of lockdown made no difference at all to their outlook.
Nearly a fifth (16%) said the announcement made them less confident about their employment prospects (vs. 15% who felt more confident) and half (50%) were left feeling unconvinced that the government’s exit strategy could work. More than four in ten (43%) said that the plan to gradually end the lockdown did not seem realistic or achievable.
In fact, the findings reveal fears that opening up the UK will ultimately have an adverse effect on household financial prospects; 82% said they were worried that a gradual exit from the lockdown could cause a second spike in the virus which could have a more prolonged impact on their household finances, with 40% admitting they were “very worried” by this possibility.
The proportion of households who are not confident that they will be able to keep on top of payments over the coming weeks has remained at one in five (20%) for the fourth week in a row. However, cracks in household financial stability are starting to grow; the number of households who say they have enough money to tide them over during the pandemic has dropped for the third week in a row to 65%, down from 67% last week and 69% the week before. Equally, the proportion who feel that their income is not sufficient to cover their outgoings has risen from 39% to 41%.
Families with children continue to bear the financial brunt of the lockdown, with 29% struggling to pay household bills over the past week (up from 28% the week before) and the same proportion (29%) expressing concern over their ability to cope financially in the coming weeks. This compares with 18% of the general population who struggled financially over the last seven days.
Families with children are taking on more debt and are borrowing money from loved ones because of the financial pressure. One in ten families with children at home said they have had to take out an additional credit card or personal loan, and the same number admit they have had to ask family and friends for money to tide them over.
Over a third (34%) of families with children say they have needed to increase household expenditure beyond normal spending levels this week, compared to 28% of those without children at home. To meet rising costs, families with children are also more likely to rely on rainy day funds, with 28% admitting they had dipped into savings to keep on top of their household finances (vs. 21% amongst those households without children at home).
Nearly a third (30%) of families with children at home want more information on additional financial help the government could grant households (vs. 18% amongst households without children at home). A quarter (25%) of families with children at home want to see the government ask financial services companies to take further measures to help protect their finances, compared to just 17% amongst those without children at home.
Anna McEntee, Product Director at comparethemarket.com, said “Households with younger families at home are clearly struggling to make ends meet, as the financial pressure as a result of the lockdown shows no sign of reducing. Despite the government and many companies offering freezes or holidays on bills and debt repayments, this does not seem to be enough for families who have seen their income decrease.”
“The Prime Minister’s plan to gradually reopen the UK economy seems to have resulted in no more than apathy among UK households, with most saying the announcement did nothing to improve their confidence around their finances, job or even their health. In fact, in many cases, the announcement has made people more nervous than they were before about getting back into society. The government’s exit plan is a gradual one and only time will tell if it can successfully get the UK back up and running. For the moment, however, it seems households will be under significant financial pressure for some time to come.”