ONS has published detailed new data and analysis covering the effect of COVID-19 and associated matters on UK household finances over financial year 2020-21.
This data shows that experiences varied according to age, ethnicity, type of employment and income level – the least well-off were most likely to report income decline.
Household spending fell across all income groups – the highest income households saw the greatest relative reduction, which ONS attributes to reduced “fun” spending such as eating out and (especially) foreign travel.
Most households saw income exceed spending, allowing them to repay debts or build-up savings if they chose to (the “COVID savings pile” idea).
Perhaps unexpectedly, most households found it slightly easier to pay household expenses during the study period, although wide disparities appear in the data.
The self-employed were more likely to struggle with living costs, perhaps because many saw reduced working hours.
The data also shows broad disparities between ethnic groups – those identifying as Black were most likely to report struggling with household finances.
This ONS data supports learnings from IGD’s ShopperVista survey, which reveals that experiences during the recovery from COVID continue to diverge – IGD calls this the “K-shaped” recovery.
More recent ONS data, covering 2021-2, suggests that demand for labour is rising and wages are coming up, which may improve the situation of those that continue to struggle.
However, inflation is also placing pressure on household spending power.
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