Since the start of the second lockdown in September, a large number of people in the UK are pessimistic about their finances and say their finances have worsened over last three months as decreases in income continue.
This is one of the findings of the latest LV= Wealth and Wellbeing Monitor, which surveys 4,000 consumers on a quarterly basis to track their attitudes and outlook for savings and spending.
Although outgoings are decreasing, supermarket spending is rising and spending on socialising has fallen significantly.
Some 36% of the adult population (18m people) said their finances were worse than three months ago with only 11% saying they were better. 26% (13m people) expect their finances to worsen over the next three months, while 12% expect it to improve.
Drops in income continue. 20% (10m) say they have seen their income fall in the past three months, compared to 13% who said their income increased, highlighting how people are still experiencing a negative impact on their incomes as a result of Covid.
Meanwhile, 13% of people surveyed have reduced the amount they are saving into a pension. 4% of people not retired at the start of 2020 said they have had to access their pension savings to make up for reductions in income or redundancy. Some 8% of those people not retired at the start of 2020 say a reduced income has meant they may have to retire later than planned.
Spending at supermarket remains elevated but socialising is down: Due to the second lockdown, 61% (32m) said the amount they spent on socialising decreased in the past three months and 30% (16m) say their spending at supermarket had increased.
Clive Bolton, managing director of savings and retirement at LV=, said: “Figures from the LV= Wealth and Wellbeing Monitor highlight just how difficult life has become for millions of people since the introduction of the second lockdown, and the finances of millions of people have deteriorated markedly since the summer.
“During the summer, loosening of lockdown restrictions led to an increase in consumer spending, a reduction in saving and an increase in spending on socialising. However, the second lockdown, increased company failures and redundancies are shaking consumers’ confidence and reshaping their attitudes to savings and spending.
“Many people are reducing their long-term savings into pensions, while some of those aged over 55 have even resorted to drawing money from their pension to make up for reduced incomes or job losses.
“However, the development and introduction of vaccines is terrific news and we would hope to see an uptick in people’s outlook in next quarter’s Wealth and Wellbeing Monitor data as we start to see a return to a more normal way of life.”