The latest European consumer payment report, a survey of over 24,000 consumers by credit management company Intrum, found that 36 per cent experienced an income drop as a result of the Covid-19 crisis. Around 10 per cent said their income has since gone back up to pre-crisis levels and a further 22 per cent believe their income may soon decrease.
Young people and parents in the UK have been disproportionately affected, with more than half of 18-21-year olds and 50 per cent of parents surveyed taking an income hit. In total, 60 per cent of parents said they are more concerned about their financial wellbeing now than at any point in their lives, where 37 per cent of non-parents said the same.
Intrum’s UK managing director Eddie Nott said: “Our research shows the financial effects of the Covid-19 crisis are acute for particular groups. These vulnerable groups are those who have less financial flexibility anyway. For example, young adults often have fewer savings to fall back on, less disposable income and may be more likely to be made redundant. Parents have had to juggle childcare and home schooling with maintaining their income.”
The report also found a gulf between those who are struggling and those whose incomes have not been affected by the Covid-19 crisis, with one fifth of UK consumers saying they needed to borrow money to pay bills in the last six months, and 77 per cent of those people borrowing every month to make ends meet – up from 53 per cent in 2019.
Meanwhile, 78 per cent of consumers said they are able to save money, with the majority maintaining their previous saving levels and 28 per cent saving less, where 18 per cent even managed to increase savings pots.
“Many of those whose income has remained the same have found they are better off financially, with no commuting costs, reduced leisure expenditure and few travel opportunities,” said Nott.
But almost half of those surveyed in the UK said they have realised their finances are not as secure as they need them to be with far more caution about unnecessary borrowing. For example, 55 per cent are more wary than usual about taking on debt and 58 per cent don’t want to borrow money to spend on major purchases until they are sure the crisis is over.
Consumers are also more aware of local businesses with 60 per cent more likely to support them after seeing the effect of Covid-19 and 65 per cent said they are more aware about the negative impact of a sudden revenue drop.