Households ‘think it could take three years for finances to recover from Covid’

Households believe it will take three years on average for their finances to fully recover from the impact of the coronavirus pandemic, a survey has found.

More than a third (36%) of households have not managed to save any money since the first lockdown in March 2020, the household financial confidence tracker from comparethemarket.com found.

Just over half (52%) report they are eating into their savings and 53% are worried about running out of money.

Over a quarter (29%) of families with children at home had struggled to pay their bills in the previous week, as had 16% households without children living at home, the survey carried out between January 15 and 17 2021 found.

Nearly three in 10 (28%) of families with children living at home reported they felt less financially secure currently than during previous lockdowns, compared with 16% of households who do not have children at home.

Some families reported having to sacrifice some of their income to take time off work for childcare, home schooling, or to provide wider support to their household.

Nearly half (44%) of families are concerned about eligibility criteria for financial products being tightened.

If coronavirus lockdowns last beyond March, one in seven (13%) families with children at home believe they will need to take on more debt, and a similar proportion (11%) will turn to family and friends for money.

If strong restrictions continue beyond April, nearly one in 10 (9%) families with children at home worry they will not be able to afford their rent or mortgage, will need to apply for a payment holiday, or have to take on another job to make ends meet, the survey found.

Ursula Gibbs, director at comparethemarket.com, said: “Although the vaccine rollout is a much-needed light at the end of the tunnel, unfortunately for many families the financial impact of the coronavirus will be felt long after lockdown lifts.

“Families with children at home are particularly affected and many are more concerned now about their ability to pay bills and make ends meet than at any other point in the past year.”

She said switching bill providers can provide some relief to households. Recent research by the comparison website indicated that household bills fell by an average of £174 over 2020 for those who switched providers.

More than 2,000 people across the UK were surveyed.