15th July 2020
RV analysts and car and LCV remarketers will be relieved that credible survey results suggest that, so far, only a small minority of households have been affected financially by Covid-19 and lockdown;
There appears to be a gradual downward trend in the proportion of UK households reporting that they had been affected financially by Covid-19 and lockdown. By the first week of July, this proportion had fallen to 18.0%, less than one in five households;
The proportions of households reporting that they were having to borrow money or were struggling to pay bills have been relatively small and were respectively 3.1% and 2.5% of the population in the first week of July.
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Against most expectations, fewer households reported financial distress in the first week of July compared to earlier weeks of lockdown.
This should provide some relief to RV forecasters and car remarketers concerned about deteriorating levels of consumer affluence and confidence to spend. This encouraging insight might also form part of the basis of a market recovery strategy.
Since the start of April, the government’s independent statistical agency, the Office for National Statistics, has carried out regular surveys of households’ lockdown experiences in Great Britain (that is, excluding Northern Ireland). The sample sizes used by the ONS and the consistency of the questioning and survey methodology allows us to invest some credence in the survey results.
When asked “..in which ways is Coronavirus (COVID-19) affecting your life?” the ONS has presented respondents with nineteen options, including health, work, relationships, caring responsibilities and finances. Respondents can choose as many options as they want.
The proportion citing that their household finances have been affected has fallen gradually from 26.8% at the start of April to 18.0% in the first week of July. The responses might have been affected by the early payment problems of the government’s Coronavirus Job Retention Scheme.
Nonetheless, an overwhelming majority of respondents to these surveys have stated that their household finances have not been affected by Covid-19. This proportion averaged 78.0% over the June surveys.
Respondents who stated that their finances had been affected have been subsequently asked how they had been affected in the past seven days. They have been offered twelve optional answers. The most frequently cited has been ‘reduced income’.
The proportion of respondents who reported that their household finances had been affected and went on to cite reduced income has been steady during lockdown at around 72%, or 14.5% of the overall population. In the first week of July, 74.0% of respondents whose finances had been affected reported reduced income, equivalent to 13.3% of the population.
Another option concerned the use of past savings to cover regular living costs. The proportion of households affected financially who reported that they also had to make ‘use of my past savings to cover living costs’ has risen over the course of each month of lockdown, perhaps reflecting the timing of salary payments.
In the first week of July, the proportion of respondents affected financially who cited using past savings to cover living costs was 29.0%, equivalent to 5.2% of the population. This has averaged 6.0% over lockdown.
Savings habits have also been affected. The proportion of households affected financially who went on to cite that they were ‘unable to save as usual’ fell in the second half of June after rising steadily from the final weeks of April.
In the first week of July the proportion of respondents affected financial who reported that they were unable to make their usual savings was 26.0%, equivalent to 4.7% of the population.
More households are borrowing money or using credit. The proportion of those whose finances had been affected who went on to report that they ‘had to borrow money or use credit’ has risen in recent weeks after falling in early June. Again, responses might have been affected by the Coronavirus Job Retention Scheme’s early payment problems.
In the first week of July the proportion of respondents affected financially who noted that they had to borrow or use credit was 17.0%, equivalent to 3.1% of the population.
There was a different pattern among those who reported that they were struggling to pay bills.
Of those whose finances had been affected, the proportion informing that they were ‘struggling to pay bills (for example, food, energy’ fell in late April and early May, only to increase again over the course of June.
In the first week of July, 14.0% of households who were affected by Covid-19 financially reported that they were struggling to pay bills. This was equivalent to 2.5% of the population.
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