Credit, Collections & Insolvency News
More than a third of families with children at home (38%) are set to spend less on Christmas compared to last year, as the economic impact of the second lockdown continues to hit household budgets, according to comparethemarket.com’s latest Household Financial Confidence Tracker.
Nearly half (46%) of families with children who are planning to cut spending this Christmas say the pandemic has squeezed their finances and they cannot afford to spend as much as they normally would. Most families with children living at home (70%) plan to use day-to-day spending money to pay for Christmas this year, but nearly one-third (31%) will dip into rainy day savings. Nearly one quarter (24%) say they will be reliant on credit cards and almost one in ten (9%), plan to use alternative credit schemes, such as Buy Now Pay later products.
The decline in Christmas spending comes after more than a quarter of families with children at home (27%) said they found it difficult to pay bills in the last month, compared to only 17% of those without dependents. As a result of the current financial pressure, almost a third (32%) of families with children at home have dipped into savings to cope with day to day budgeting. Furthermore, two fifths (40%) of parents have looked at how they can save money on bills and subscriptions.
Looking to the new year, nearly a quarter (23%) of families with children living at home are worried about being able to pay their household bills over the next few weeks. However, in the longer term, households are more optimistic. Following the recent news about potential vaccines, over two-thirds (67%) of households feel generally more confident about 2021, compared to before the announcements were made.
High street shops hoping for a boost in trade after national lockdown ends on 2nd December may be disappointed, as 38% of UK households say they will only buy their Christmas presents online this year. This compares to just 9% who exclusively used online Christmas shopping in 2019. The pandemic continues to have a negative impact on bricks and mortar businesses as over half (55%) do not feel comfortable shopping in person on the high street. Despite hospitality businesses getting ready to open their doors, four in ten (42%) households do not yet feel confident visiting reopened restaurants, cafes, pubs, and cinemas.
Ursula Gibbs, Director at comparethemarket.com, said “Household finances are looking fragile as we emerge from the second lockdown. Many are taking a sensible approach and cutting down on Christmas spending to compensate for a loss of earnings or higher bills. Our research also suggests that the retail and hospitality sectors are set to have a difficult few weeks, as many shoppers do not plan to return to the high street this Christmas, despite the end of lockdown.”
“Thankfully, the positive news about the vaccine offers some hope and gives households more confidence that 2021 will bring good news – for healthcare, society and our finances. However, most of us will be very glad to see the back of this year.”