FILE PHOTO: Shoppers carry bags in New Bond Street, amid the coronavirus disease (COVID-19) outbreak, in London, Britain, July 18, 2020. REUTERS/Simon Dawson
LONDON (Reuters) – British households’ view of their financial situation improved modestly in July to just above its long-run average, after hitting an eight-and-a-half year low in April due to the coronavirus, a survey showed on Monday.
IHS Markit said its monthly Household Finance Index rose to 41.5 in July from 40.7 in June, though it is below its level in March before the economy went into lockdown to slow the spread of COVID-19, which has killed over 45,000 people in Britain.
“The phased reopening across parts of the UK economy appears to have been a factor supporting household finances in July,” IHS Markit said, after households reported a slight improvement in their incomes and amount of work.
Non-essential shops in England reopened on June 15, and pubs and restaurants started serving again on July 4.
However, unemployment is forecast to increase dramatically later this year when a temporary government scheme that has support more than 9 million jobs ends in October.
Britain’s Office for Budget Responsibility said last week that under its central scenario, the jobless rate would reach 11.9% in the final quarter of this year, matching a post-World War Two high set in 1984.
Monday’s survey showed 31% of people felt their jobs were less secure than before.
“Large numbers of households are therefore maintaining the cautious spending habits adopted during the early stages of the pandemic and are now focussed on paying down debt and saving where possible,” IHS Markit director Tim Moore said.
Bank of England data showed a record fall in the amount of money borrowed on credit cards in April and a further big drop in May, due to reduced spending opportunities and consumers’ fears for the future.
Reporting by David Milliken, editing by Andy Bruce