Consumers And The Economic Outlook: Inc Impact Of COVID-19 - UK - August 2020

Consumers And The Economic Outlook: Inc Impact Of COVID-19 - UK - August 2020

  • Mintel
  • August 2020
  • Retail
  • 0 pages

Report Description

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The UK is in the midst of its deepest recession on record. However, the recovery has already started, with monthly GDP growth in May and June. However, the winding down of state support for businesses presents renewed threats that could derail the recovery and is expected to lead to significant job losses.

For now, though, consumers are content. Financial wellbeing is at record levels, with most consumers suffering no major ill effects from COVID-19. How sentiment fares in the months to come is heavily dependent on the scale of the anticipated job losses, and the performance of the wider economy.”

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Table of Contents

KEY FINDINGS

A recession like no other
Unemployment figures require closer examination
Consumer sentiment has defied the gloomy conditions
Key economic indicators
Figure 1: Key economic indicators, August 2020

ECONOMIC INDICATORS
What you need to know
The deepest recession since official records began…
Figure 2: Quarter-on-quarter change in GDP, Q1 2007-Q2 2020
but the recovery has started
Figure 3: Monthly change in GDP, segmented by sector, February 2020-June 2020
Private consumption fell by 23% in Q2
Figure 4: Quarter-on-quarter change in private consumption*, Q1 2007-Q2 2020
Retail sales rebounded in June
Figure 5: Annual change in the value of retail sales, including fuel, January 2007-June 2020
Savings surged during lockdown
Figure 6: Monthly change in household deposits and quarterly household savings ratio, January 2015-June 2020
Borrowing has started to recover but still way below usual levels
Figure 7: Monthly gross lending of consumer credit and secured loans, January 2015-June 2020

THE LABOUR MARKET
What you need to know
Stability in unemployment fails to show the impact of COVID-19
Figure 8: Unemployment rate, aged 16 and over, Q1 2007-Q2 2020
Joblessness is rising…
Figure 9: Number of people employed in the UK, aged 16 and over, Q1 vs Q2 2020
but laid-off workers are not all looking for an immediate return to work
Figure 10: Number of people economically inactive in the UK, aged 16-64, Q1 2019-Q2 2020
PAYE data shows a 730,000 drop in people receiving pay since March
Figure 11: Paid employees in the UK, seasonally adjusted, January-July 2020

CONSUMERS’ RESPONSE TO THE EU REFERENDUM RESULT
What you need to know
A COVID summer of discontent for Brexit
Figure 12: Level of concern over the impact of the EU referendum, July 2016-July 2020
Prices, jobs and growth continue to dominate consumers’ concerns
Figure 13: Consumer views on the impact of the EU referendum, July 2020
35-54-year-olds are the least positive
Figure 14: Agreement that Brexit will have a positive effect on “The UK’s economic growth”, “Unemployment” and “The cost of living”, by age, July 2020

CURRENT FINANCIAL SITUATION
What you need to know
Financial wellbeing has hit new highs
Figure 15: The financial wellbeing index, January 2015-July 2020
A third have cash left over at the end of the month
Figure 16: “How would you generally describe your financial situation at the moment?”, July 2020
Working differences help explain the overall resilience of wellbeing
Figure 17: Current financial wellbeing, by employment situation, July 2020

CHANGES IN FINANCIAL SITUATION
What you need to know
Sentiment has rebounded as the economy has opened up…
Figure 18: Changes in household finances, January 2015-July 2020
but consumers are still more likely to feel worse off than better off
Figure 19: “How would you describe your finances compared to a year ago?”, July 2020
COVID-19 impact is easing but 27% are still worse off
Figure 20: Changes in financial situation since the start of the COVID-19 outbreak in the UK, June-August 2020
Gen X have been hit the hardest
Figure 21: Changes in household finances, by generation, July 2020

FINANCIAL CONFIDENCE
What you need to know
Consumers think the worst is behind them
Figure 22: The financial confidence index, January 2015-July 2020
A third are pretty confident for the year ahead
Figure 23: “And how do you feel about your financial situation over the next year or so?”, July 2020
COVID-19 expected to harm the economy, not necessarily individuals
Figure 24: Consumer views on the impact of COVID-19, 18-24 June 2020

PLANNED FINANCIAL AND SPENDING ACTIVITY
What you need to know
The recovery begins
Figure 25: The financial activity index, January 2015-July 2020
Consumers continue to focus on saving
Figure 26: “Thinking about how you spend your money, which of the following have you done over the last three months? And which do you plan to do over the next three months?”, July 2020
Most everyday spending categories are getting back to normal…
Figure 27: Expected spending compared to usual habits, 13-21 August 2020
but leisure is being held back by hygiene concerns
Figure 28: Consumers’ level of comfort doing various activities, 13-21 August 2020

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