COVID-19 Fallout

24% of the UK population feel financially worse off than before the pandemic

During the past year and a half, we’ve experienced a stock market collapse, soaring unemployment, millions deferring their mortgage payments – and paradoxically, a booming housing market, plus bulging savings accounts.

Analysis by the Bank of England has identified 28% of households have seen incomes fall during the coronavirus (COVID-19) pandemic, rising to 66% among the self-employed. Spending has fallen further, even for those in work. The Bank estimates that 57% of households cut their spending in the early months of the crisis.

Underlying unemployment rate

By mid-November last year, a total of 9.6 million jobs had been furloughed under government support schemes, at a cost of £43 billion, while the underlying unemployment rate had risen to 4.9%.

Another study reveals that 72% of the UK population have concerns for their wealth and finances in 2021. The Health, Wealth & Happiness Index shows the financial strain the pandemic has wrought on the most vulnerable parts of society.

Potential introduction of new taxes

Twenty-four per cent of the UK population feel financially worse off than before the pandemic. The figure rises to 27% for women, 35% for parttime workers and 37% for those on furlough. Just one in three Britons saidthey felt financially better off now. A quarter are fearful of bills rising, while 19% are wary of the potential introduction of new taxes. One in five fear they might lack savings and 13% feel uncertain about a low interest rate environment.

Re-evaluation of finances since pandemic

More than half of the population (56%) said they have re-evaluated their finances, with a 76% peak among those aged between 18 to 34 years old.A quarter of Britons said they have saved money since the outbreak of the pandemic and 12% have changed the way they save.

Life insurance enquiries 250% increase

High earners and people in the 18 to 34 year age bracket are the two groups who have saved the most during the pandemic. The study also found that enquiries for life insurance saw a 250% increase at the end of March 2020 as the first lockdown was announced.

Roadmap for easing restrictions

Also, enquiries for protection saw a 400% surge in the same period but only 4% of the respondents said they had taken out life insurance. Given the continuing vaccine rollout and roadmap for easing restrictions, the study anticipates a return to economic growth, with quarterly Gross Domestic Product (GDP) expansion of 4.2% expected in the third quarter of this year.

Looking to the future

Whether you’re now looking to develop in your career, support multiple generations, plan for a fulfilling retirement, thinking about the legacy you want to leave or simply getting the most out of today – during these challenging times we’re here to listen. To discuss your goals and aspirations, please contact us.

From Issue 8 Changing Tax Landscape

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