With Covid-19 restrictions continuing to be lifted, the first glimmers of what ‘post-Covid’ financial life may look like for UK households have started to be seen, according to the April 2021 Money Statistics, produced by The Money Charity.
As the UK progresses through the roadmap stages of lockdown easing, alongside the continued vaccine rollout, glimpses of positivity can be seen for the UK’s finances. In February 2021, the economy grew by 0.4% while unemployment dropped by 50,000 (to 4.9% of the workforce) in the quarter from December 2020 to February 2021.
Minimum Wage rates increased at the beginning of April, with the National Living Wage up to £8.91 an hour, with the eligibility age dropping from 25+ to 23+. Alongside this, average real pay for those in work rose by 3.7% in the year to February 2021.
Meanwhile, mortgage and long-term interest rates remained low, while credit card debt continued to fall steeply and household savings rates remained at historically high levels. This means that many consumers have a reserve of spending power as the economy reopens.
These positive signs are still tempered however by the one-third of the population who have suffered income and/or employment losses during the pandemic. The youngest people of working age have been hit particularly hard, with 18-24 year olds in employment falling by 241,000 between February 2020 and February 2021, leading to 476,000 (12.8%) unemployed 18-24 year-olds between December 2020 and February 2021. Renters wanting to get on the housing ladder have also seen private rental prices increasing by 1.3% in the year to March 2021 while average first-time buyer house prices have increased by 8.6% in the year to February 2021.
Michelle Highman, Chief Executive of The Money Charity says: “The pandemic’s effects have been deeply unequal, widening many of the inequalities in UK society and hitting the young particularly hard. As the economy recovers, the challenge will be to ensure any recovery delivers for all ages and stages, young and old, women and men, those on low incomes and higher ones, minority and majority ethnic backgrounds.
“The pandemic has provided a shock to the system which has exposed many of our financial fragilities. As we move forwards, The Money Charity will continue to play its vital role in providing Financial Education and Financial Wellbeing work which promote improved wider money management, which we believe are essential foundations for a healthy society.”
Other Striking Numbers from the April Money Statistics:
- Outstanding credit card balances fell by 9% in the year to February 2021. (P14.)
- 7 million people are forecast to be living in families with too little income to meet everyday needs by May 2021. (P4.1.)
- 3 million people are behind on household bills, including council tax, rent and utilities. (P4.1.)