Millions feel pressure to spend as lockdown lifts

More than half of the UK’s youngest adults fear post-lockdown social pressures after being one of the demographics hardest hit by the fallout of the pandemic, new research has found as debt charities warn of long financial Covid.

Almost 40 per cent of UK adults are concerned about being pushed by friends and family to go out and make the most of lockdown when they can’t afford it, rising to 53 per cent among under-24s.

The figure remains high in the 25-34 and 35-44 age groups, with the level of concern reducing as people get older. 

For more than one in 10, affordability concerns stem from having to take a salary cut over the last year, but other reasons include: the chances of the cost of living rising; paying off loans and other debt taken out as a direct result of the pandemic; rising rent and utility bills; cuts to benefits and an end to the uplift in universal credit.

The current Coronavirus job retention or furlough scheme was extended last month until September, but is unlikely to be extended. As part of his Budget announcement, chancellor Rishi Sunak also confirmed a six-month extension on the £20 universal credit uplift. Both schemes are set to end at the same time.

Elsewhere, one in five people are worried the company they work for will not survive when the restrictions and government support measures end.

But the figures also suggest a geographical bias towards regions with a high density of opportunities to spend in pubs, restaurants, shops and leisure facilities. Londoners are also feeling the social pressure more than other populations, the data from lender KIS Finance suggests. They are also most likely to be concerned about losing their job.

Almost three-quarters of UK savers are planning to stick to the extraordinary savings habits prompted by the last year’s stresses, figures from Zopa suggest. And three-quarters want to avoid dipping into their savings post lockdown.

Meanwhile, debt charity StepChange has warned households are still struggling to recover from the pandemic as support schemes are rolled back.

UK consumers struggling financially as a result of Covid-related problems can no longer apply for standard payment deferrals put in place as temporary support measures.

But a year since the start of the pandemic, a quarter of the 1.6 million people who accessed credit payment deferrals on lending like mortgages and credit cards have missed repayments in that time. Half say they have only resumed payments with difficulty.

Almost 80 per cent of those whose income has been hit by Covid have not recovered financially. StepChange estimates that, since March 2020, more than 14 million people have suffered a hit to their income considerable enough to affect their ability to pay for essential costs.

But even by January this year, 11 million of those said they were still struggling to meet those costs. The charity warns that the pandemic has exhausted coping strategies and eroded financial resilience, increasing the likelihood of falling into problem debt.

An estimated £25bn of arrears and borrowing directly attributable to Covid has built up since March, affecting almost 11m people, including almost 3 million who have used high-cost credit to make ends meet.

One in five of those who’ve suffered a hit to their income due to Covid says they or their children have experienced hardship, including skipping meals, rationing utilities or going without appropriate clothing for the weather since the beginning of the pandemic.

StepChange is calling on the government and regulators to introduce measures to support vulnerable households to make ends meet, provide ways to address arrears and debt affordably and protect those who are threatened with enforcement action.

This, the organisation suggests, should include helping renters struggling with arrears stay in their homes. StepChange has also called for protections against eviction and a package of grants and interest-free loans to help people address rent arrears safely. The charity is also calling on the government to extend the £20 per week uplift to universal credit beyond September this year.

Campaigners are also calling for amendments to council tax regulations to require councils to put in place affordable repayment plans for those experiencing difficulty before court and enforcement action are taken.

“As the country continues to try returning to normal, there are millions of households still struggling with covid debt for whom ‘normal’ is a distant dream,” says StepChange CEO Phil Andrew.

“Without urgent action to shore up the finances of the millions struggling to meet essential costs, covid will cast a shadow over the economy for years to come.

“It is within the government and regulators’ gift to support those hit hardest by the pandemic, but it will require coherent, long-term planning and financial backing.

“By implementing measures to help people address covid-related arrears and debt affordably, we can reduce the risk of financial long covid for households across the country.”