A comprehensive report released today by Standard Life Foundation on how household finances have been affected by the coronavirus pandemic finds as many as four million households could be in serious financial difficulty by the end of July. Nearly six million (5.7m) more will be struggling to make ends meet, meaning a total of 10 million households will face financial difficulties. In addition, a quarter of UK households think that their income will fall in the three months to the end of July – before the changes in the Furlough scheme begin to take effect.
Those most at risk of serious financial difficulty are households with earned income from part-time work, self-employment or the gig economy. People with disabilities that limit their daily activities will also be at high risk, as will families with dependent children.
A notable change since the last survey in early April was a small but statistically significant deterioration in levels of financial resilience, as households used their savings to help them to make ends meet. As might be expected, this was concentrated among the households exhibiting the higher levels of financial strain, with 85 per cent of households in serious financial difficulty having no money at all in savings (an increase from 82 per cent in April). Of the majority of households in serious financial difficulty that had not already lost a third of their income, six in ten (61 per cent) said that they would be unable make ends meet if they had a fall of this magnitude – up from 51 per cent in April.
Researchers also found that while many householders in white collar jobs have been able to build up a financial buffer during the lockdown, whilst householders in skilled and unskilled manual work have seen a disproportionate decline in financial security. Part-time workers and those in low-waged or insecure workers face the least financially secure future.
Mubin Haq, CEO of Standard Life Foundation, said:
“The looming jobs crisis makes this month’s financial impact tracker results very concerning; many of those most affected will not have been able to build up a financial cushion for the hard times ahead. Government needs to act fast to ensure the coronavirus income safety nets are fit for purpose and ensure those who do see a drop in income do not fall into serious financial difficulty. We can already see the situation is set to deteriorate and this downward movement is set to become even more rapid as redundancies increase. We urge the government to rethink and act with the urgency that is needed.”