Almost one in four adults have already taken a financial hit from the coronavirus pandemic, according to official figures laying bare the hardship emerging across Britain as the crisis unfolds.
According to a survey of 1,500 people by the Office for National Statistics conducted over the last days of March and first week of April, 23% said the outbreak was affecting their household finances. Of those as many as three-quarters had seen their incomes cut since the government’s lockdown measures were first introduced last month.
The early snapshot of the financial blow also showed almost a third already using savings to cover living costs, while more than a fifth say they are are struggling to pay household bills.
Nearly half of all adults said they expected their financial position to worsen over the next 12 months, in a reflection of the rising economic fallout as the government attempts to protect lives by containing the spread of the disease.
As economic and social activity around the world has been brought to an effective standstill as the disease spreads, there has been a similar impact in other developed countries. According to figures from the consumer research provider Kantar, one-third of people across the G7 group of wealthy nations are already facing reduced personal income.
Italy, as the first European country to be hit hard by Covid-19, has suffered the worst hit, followed by Canada and the US, according to the research.
A quarter of UK firms have temporarily closed or paused trading because of the Covid-19 outbreak and lockdown measures, according to another ONS survey of 5,300 businesses. Many of the 75% of companies who are still trading had also furloughed some staff, as they try to ride out the crisis.
Critics of the government have said Britain entered the coronavirus crisis on a weak footing after a decade of sluggish wage growth and austerity. Average pay levels for British workers only returned to pre-financial crisis levels after inflation at the end of 2019, taking 12 years to repair the damage from the last recession.
Laura Suter, personal finance analyst at the investment platform AJ Bell, said: “The UK went into this crisis with a chronic savings deficit, with many households having little to no savings to fall back on if they saw their income hit.
“It means that any drop in income will have an immediate effect on lots of households, particularly if there are no big cutbacks they can make, and we’re already seeing the impact of this.”
According to separate figures published by the ONS on Thursday, the price of high-demand food and sanitary products has risen sharply in online shops over the past month as the crisis mounts.
A basket of the products – including tinned beans, toilet roll and cleaning materials – costs 4.4% more than just before lockdown measures began a month ago, according to the government statistics agency, which carried out the comparison.
Prices rose by 1.8% in the past week alone, driven by soaring pet food prices and a sharp increase in the cost of rice, nappies and handwash.
The ONS cautioned that its figures are “experimental” and that some of the prices it collects online can change rapidly from one week to the next. It said that food prices had been relatively stable over the period from 16 March, just before lockdown measures began, to 12 April. Prices for pet food, which contributed the biggest rise in the overall index, and rice rose by 8.4% and 5.8% over the past month, while prices of pasta sauce fell by 4.5%.
The government sets an annual inflation target for the Bank of England of 2% based on a much broader basket of goods and services, which the ONS said should not be directly compared with its experimental statistics. However, the early warning signals from the price of goods in high demand could indicate the start of a squeeze on living standards for households as the economy collapses into recession.
