In Focus Collections
Financial uncertainty set for foreseeable future
The economy is undergoing a period of recovery, but is still impacted upon by the pandemic
Michelle Highman Chief executive, The Money Charity
A mixed financial picture continues this month, with promising signs of economic recovery tempered by the continuing effects of the pandemic, according to the July 2021 Money Statistics. This month’s figures show plenty of
positives for many UK households as the economy grew by 0.8% in May 2021, while average pay including bonuses for those in work grew by 7.3% (5.6% after inflation) in the year to May. Employment rates have been a concern for many months now, but from March to May 2021, unemployment fell by 68,000 compared with the previous quarter. Many households also continued their
encouraging lockdown habits of increased saving rates and decreasing credit, with the average household savings rate increasing to 19.6% in January to March and outstanding credit card debt falling by 13.5% in the year to May 2021. These strong averages reflect the fact
that for many households in work, or fully protected by the government’s support measures, incomes and finances have actually improved during the pandemic.
Balanced However, as so often in recent months, most good news has to be balanced against the bad. While the economy has grown, in May
2021 it was still 3.1% smaller than in pre-pandemic February 2020. Average real pay was also less in real terms than it was before the 2008 financial
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crash, while unemployment continues to particularly affect young people, with 11.6% of 18-24 year-olds unemployed in March to May 2021. Consumer prices rose by 2.5% in the
year to June 2021 and one-fifth of people in the second-to-lowest income group are reported to have taken on more debt as a result of the pandemic. An additional 500,000 people are expected
to fall below the poverty line after the upcoming £20 per week cut to Universal Credit, meaning significant numbers of UK households remain in a highly precarious financial situation.
Challenges This month’s Money Statistics show the challenges that lie ahead as we continue to navigate the ever-changing pandemic situation. While there are some encouraging signs,
these remain qualified by the financial difficulties faced by those who have lost work, gone into debt as a result of the pandemic and who face a potentially difficult recovery period. Uncertainty is certainly a significant
challenge to us all in managing our money well, but we remain dedicated to our mission of working with people of all ages, supporting them to increase their Financial Capability and develop their Financial Wellbeing. It is only with that help, support and
encouragement that we can expect to see the UK find its financial way forward.
www.CCRMagazine.com August 2021
Employment rates have been a concern for many months now, but from March to May 2021, unemployment fell by 68,000 compared with the previous quarter
Other striking numbers l In May 2021 there were 10% fewer under-25 year-olds on the UK payroll than in January 2020. The number of hospitality workers was 17% down on January 2020. l Government debt increased by £630m a day in the year to June 2021. l On average, a UK household spends £4.33 a day on water, electricity and gas.
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