Positive signs that COVID-19 financial shock is ‘abating’

There are positive indications that the financial shock of COVID-19 is abating as lockdown measures in the UK begin to ease, according to TransUnion.

Research from the credit reference agency suggested that over a quarter (27%) of UK households now do not expect any future financial impact as a result of the pandemic, almost double the figure (14%) when the study began in March.

TransUnion said its data, based on an online survey of 1,071 adults in the UK and conducted between 3 and 6 July, demonstrates the steadying effect of support schemes and government provisions in place, with 20% of households having received a form of financial forbearance from their finance provider – most commonly for personal loans and mortgages.

The survey found that nearly half (49%) of respondents have cut back on discretionary spending to help them navigate their way through the pandemic, and indicated that 57% of people are delaying holidays while another quarter (26%) are putting off home improvements.

“Our research confirms that the initial shock has now subsided and that’s thanks in part to the support that’s been offered to consumers,” TransUnion managing director of consumer interactive in the UK, Kelli Fielding, commented.

“However, with seven in 10 of those impacted still worried about their ability to pay bills – with credit cards, utilities and rent payments causing most concern – it’s no surprise that discretionary spend has been cut. As a result, consumers have limited means to support the government’s drive to reboot the economy as shops and restaurants reopen.”

TransUnion director of research in the UK, Brendan Le Grange, added: “Whilst it’s great to see an increase in consumer confidence, it’s important to be mindful of the long-term implications of this pandemic.

“Of those who have been financially impacted by COVID-19, 23% have cut back on their saving for retirement and 11% have actually dipped into their retirement savings to get by. As a result, even when their incomes return to pre-crisis levels, there’s going to be a significant dent in their finances that could affect their future means and ultimately their standard of living in later years.”

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