COVID-19 & the impact on individual finance and debt
Posted by Natalie Pearson 11/08/20
The impact of COVID-19 on personal finances is something that will inevitably reveal itself with more clarity in the coming months. Individuals impacted have struggled with redundancies, reduced working hours and pay, being furloughed and concerns over job security.
The Money and Pensions Service released a detailed report on the impact of COVID-19 on financial wellbeing and found that individuals are using savings to cover living costs and one in five are struggling to pay bills. They also reported that low income households are at greater risk of failing into financial difficulty as they are more likely to work in shut-down sectors, less able to work from home, and have less capacity to absorb an income shock. The report suggested that the UK is headed for a recession and is unlikely to recover before the second half of 2021.
In June the government announced a £38 million support package for debt advice providers helping people affected by Coronavirus. This package was designed to support organisations who provide essential services to those struggling with their finances. The Money and Pensions Service are overseeing the allocation of the funds.
Bank of England interest rates have been cut to 0.1% to help combat the economic consequences of the pandemic. This rate is an all-time low that came after a special meeting between the Monetary Policy Committee back in March. Some mortgages will be cheaper as a result of the cut, but only those with tracker mortgages will see their rates drop. However, it’s bad news for savers as saving rates will fall further, unless it’s a fixed-rate account.
John Ellmore, Director of KnowYourMoney, said “It is no secret that the coronavirus pandemic has caused financial hardship for millions of Britons. Indeed, our research illustrates that seven in ten people have been adversely affected by the crisis, which has sparked widespread financial anxiety”.
Since the 1st August those who had been shielding at home, based on vulnerability, no longer have an automatic right to Statutory Sick Pay (SSP). Individuals who are shielding will need the usual evidence from a GP about their condition, rather than vulnerability to COVID-19, to claim SSP. You can keep up to date with the latest changes to benefits by visiting The Benefits Training Company news page. If you need help with a query about benefits you can call, or chat online with, one of our advisers (details below).