Government action to prevent people being laid off during the Covid-19 crisis has failed to reassure people in the UK about their jobs and their financial wellbeing, a survey has reported.
On the day that the chancellor Rishi Sunak’s furloughing scheme to subsidise wages formally opened, the snapshot of household finances from IHS Markit showed the fastest drop in confidence since the survey began during the depths of the last recession in early 2009.
The household finance index, which measures overall perceptions of wellbeing, fell from 42.5 in March to 34.9 in April, while uncertainty about the length of the lockdown meant households were at their most pessimistic in eight and a half years about how they would make ends meet.
The chancellor moved swiftly to announce the government would subsidise 80% of the wages of workers who were furloughed and later broadened its support to include most of the UK’s 5 million self-employed.
But the IHS Markit survey found that perceptions of job security had plunged to their lowest on record. People working in the education, health or social care sectors were the least gloomy, while households employed in media, culture and entertainment were the most worried about their employment prospects.
IHS Markit said one encouraging sign was that there were no signs of household budgets coming under immediate stress because of the lockdown. Debt levels held broadly stable when compared with March, while households dipped into their savings to meet their financial commitments.
Joe Hayes, an economist at IHS Markit, said the deterioration shown in the survey was unsurprising.
“Even with the government’s scheme to backstop earnings, those in receipt of this will still be worse off as support has been pledged for 80% of their full income. Around one in three UK households reported a decline in income from employment during April, which was by far the largest number since the survey began in 2009.
“Limiting the adverse impact on UK household balance sheets will be crucial in the coming months so that when economic activity does recover, consumers are not stuck repaying debts and instead are able to boost discretionary spending to aid a strong recovery.”
