The Money Charity’s popular monthly report on the UK’s finances, The Money Statistics, returns this month, painting a picture of a UK which has not only been significantly affected economically and societally, but which has also had its lack of financial capability and resilience sorely exposed by the pandemic.
The last Money Statistics report was released in March 2020, and largely focused on pre-crisis figures relating to the start of 2020. Half a year on, at least three clear messages stand out from this new set of statistics. Firstly, the sheer scale of the economic damage arising from the pandemic and the UK’s countermeasures. The UK economy has shrunk by -20.4% from April to June 2020 with government debt up, employment of people aged 18-24 has fallen by 169,000 between February and July 2020, cash machine transactions have reduced by -37.2% in the year up to August 2020, while real wages, outstanding credit card debt, and interest rates are all down. House prices and total mortgage debt have gone up, while internet shopping has increased with 28.1% sales now online as a proportion of all retail sales in August 2020.
Secondly, the large numbers of people benefitting from temporary support, protections, or greater forbearance. There were 9.3 million furloughed employees in June 2020, with many benefitting from mortgage, loan servicing and rental holidays. Government debt servicing costs were down, along with personal insolvencies, calls for debt advice, and mortgage and landlord possessions. Thirdly, the concerning levels of potential for more vulnerable parts of society to struggle even further as support measures are eased off or removed. 227,000 renters have fallen into arrears since the beginning of the pandemic, while mortgage arrears, numbers of people on Universal Credit, and redundancies have all increased.
Furthermore, some of the statistics, such as the decline in cash machine transactions and the major rise in online shopping, signal potential long-term changes to the UK’s economic structure. However, most of these figures should be seen less as new trends in the UK’s financial behaviours, and more as a stark highlighting and exacerbating of existing, longstanding issues. The crisis has exposed the shortcomings in financial awareness, understanding and resilience which The Money Charity has been seeking to address for over 25 years.
Michelle Highman, Chief Executive of The Money Charity says: “Firstly, and most importantly, we hope that all our readers and their families, friends and colleagues have been safe and well during this challenging period. It has been a real disappointment for The Money Charity to have been unable to produce The Money Stats over recent months. However, returning to these numbers is a fascinating exercise, demonstrating not new things, but rather showcasing the issues we have been loudly advocating for over 25 years.
“Clearly the pandemic is far from over, and many of these statistics will only continue in their current direction, but the moment for strong and decisive planning and action is now. It is essential that this time is used as a reset button to fully integrate strong, practical and engaging financial education into our schools, as well as to fix the broken systems and unfair practices which hinder people from achieving financial wellbeing in their lives.”