Coronavirus: UK household finances in worst state since 2011
UK households said their finances were in the worst position since 2011 in March as coronavirus battered the economy, according to a new survey.
Households also reported that their income from employment plunged at the fastest rate in at least 11 years and fears about job security spiked.
The household finance index from data firm IHS Markit – which measures households’ views of their financial wellbeing – plunged to 34.9 in April from 42.5 in March.
It was the fastest fall since records began in 2009 and took the gauge to its lowest point in almost nine years, showing the intense strain UK households are under.
With a great deal of uncertainty about how long the coronavirus lockdown will last, households were deeply pessimistic about the future. The gauge of future financial security hit its lowest level in more than eight years.
The dire survey data came a week after the UK’s budget watchdog said the economy could shrink by 35 per cent in the second quarter and 2m people could lose their jobs.
Households showed signs of severe stress in March despite unprecedented interventions in the economy from the government. Treasury schemes include a promise to support £330bn of lending and to pay 80 per cent of the wages of workers that would otherwise be laid off.
Despite the job retention scheme, which launched today, households’ perception of job security fell at the fastest rate since records began, IHS Markit said. Hundreds of thousands of people are already thought to have lost their jobs, judging by benefits applications.
Households with members working in media, culture and entertainment were the most concerned. Those working in education, health or social care were the least downbeat.
As companies laid off workers in March, incomes plunged at the fastest rate since 2009 “by a wide margin,” IHS Markit said.
“The latest data were compiled during the first week of April and therefore give an early indication of the severe impact on household finances from the public health emergency,” said Joe Hayes, economist at IHS Markit.
He said there was some positivity in the survey data, however. “Overall measures of cash available to spend and household debt [are] proving much more stable than workplace incomes.”