The cost of a Covid Christmas

To be perfectly honest, this Christmas is yet another game of two halves when it comes to the fight for supremacy between our financial affairs and this virus.

All year we’ve had spectacular and awful news on the personal finance front, from the now £20bn we’ve paid off on our debts to the latest, 370,000 between August and October, record redundancy rate.

This festive week too, the numbers are polarised. Are we blowing out on a Christmas to make us feel better? Or stamping down hard on spending, in light of news – including that of the past few days – that could change our immediate circumstances significantly?  

Here are the insights we’ve snatched from the confusion.  

More or less?

In some ways, this year’s spending season is exactly the same as all the others. Four in 10 of us haven’t set a budget and 90 per cent of those who do will exceed it, one survey by instalment credit card provider Tymit suggests.  

But while some, including supermarkets like Tesco, are unsurprisingly reporting an increase in Christmas spending this year, in a bid to “treat loved ones more than ever”, a greater weight of evidence suggests a lower budget than last year.

Whether directly impacted or simply spooked, a fifth of the UK population has planned a significantly reduced spend this year, with another quarter of Britons cutting back at least a little compared with historic spending.  

Building society The Nottingham calculates that could mean a £4bn saving compared with last Christmas’s spend, with reasons ranging from feeling a blow-out is inappropriate during a crisis to furlough and redundancy, meaning there’s simply less money available – including in households that are now providing more financial support to loved ones.  

In fact, half of UK workers don’t think they can really afford the extra costs of Christmas this year because of the pandemic’s impact on their earnings. And with more than a quarter having to wait until after Christmas for their December pay, earnings technology provider Hastee has warned that specific demographics, including younger adults and those in areas including London and the West Midlands, are particularly likely to turn to high-cost credit to get through December and January.

Here and there

As for where we’ve spent, there’s no doubt physical shopping has taken a battering, especially in closed-down areas in tier 3 and now tier 4. Half of us say our in-person shopping is down – with more than one in 10 saying they won’t have spent 50 per cent of what they parted with in stores last year. All the figures point to those shoppers moving directly to online purchases, though overall spending is still down across both.

Delivery services are certainly have a boom year, with sales among these businesses up 90 per cent year on year by the end of November alone compared with 2019.  That was with a month still to go until the big day.  

With smallest parcel shipping starting at around £2 through private couriers or £3.10 from Royal Mail, to send at a standard delivery speed, Christmas budgeting has to include an increasingly significant postage bill.  

Royal Mail predicted that we’d send 10 more Christmas cards each this year, due to a lack of being able to meet up, though luckily the latest rise in the cost of stamps won’t roll out until January.

On or off

The government’s great Christmas cancellation came too late for thousands who had already bought the extra groceries to cover up to five days with one or two other households.  

Before the new variant put our extended plans on hold, 60 per cent of us had expected to still spend the same amount or even more as last year on food and drink, The Nottingham found.  

And as traditional set-ups changed, a larger number of first-time hosts are stepping up – those most likely to overspend and over-cater on everything from premium food and drink to new tableware and extra decorations, Tymit warns.  

And with smaller gatherings in a greater number of households, the energy bill will be different this year. Rather than shutting up and turning off homes to travel to relatives, more of us will be cooking smaller Christmas meals, watching TV specials and lighting up trees in separate households this year. Switching service Energyhelpline.com estimates the cost of separate celebrations and no households mixing at Christmas and new year will translate to a bill of £717m, compared to a five household or normal Christmas bill of £307m.  

Finally, and particularly this year, our seasonal spending won’t just be about the big day.  

In need of something to look forward to, one in three Brits will book their 2021 summer holiday by the end of this month in a bid to combat coronavirus fatigue, according to credit agency TransUnion. A quarter of us will put it on credit and face the music after the hangover has faded.