A third of Brits will be financially “worse off” as the UK comes out of its COVID-19 lockdown, research suggests.
With the government’s furlough scheme set to end on 31 October and other forms of financial support also disappearing, one in three Brits told SimpleUsability the lockdown period has had a negative long-term impact on their finances.
According to the market researcher’s survey of 1,072 people, nearly three quarters (74%) have been furloughed, while over a fifth (22%) have relieved on government grants, such as the self-employment government support scheme.
Meanwhile, 6% have relied on government loans, and 8% have received other forms of financial support, such as a mortgage holiday or universal credit.
Now, nearly half (45%) of Brits feel “less secure” about their financial future — especially as over a quarter (28%) used more credit in lockdown, and a fifth (21%) went into or further into their overdraft, the research found.
“I have never used my overdraft or credit card, now I’m owing money on both,” one respondent said.
What’s more, although nearly three in five (57%) Brits said they have changed how they manage their money during lockdown, over three quarters (77%) have not looked for any financial advice.
With coronavirus still a prevalent threat in the UK, over half of Brits say they are unlikely to use cash to pay for goods and services coming out of lockdown.
However, seven in 10 believe the UK should not become a cashless society — something Britain has been “sleepwalking” towards for years, despite the huge problems experts say it would cause for those in debt or who live in rural areas.
“Elderly and vulnerable people use cash and are not as confident with cards or online banking, so it’s not fair to the older generation,” a respondent said.
The research also shockingly revealed only one in five Brits actually understand what “open banking” — using apps and websites to see all of your financial information in one place — means.
When informed of the definition, many expressed concern about data sharing, fraud and trust.
“It’s too dangerous as data from all my banks is too easily retrievable by a hacker. Instead of hitting one bank, a hacker can hit the servers of an open banking app and steal everything about a customer in only one hit,” one Brit said.
Judith Doherty, strategy director at SimpleUsability, said: “As the financial sector scrambles to retain trust amongst their customer base post-lockdown, it's important to note that half of consumers say they’ve changed how they manage their money. So how should the finance sector respond?
“Banking firms and personal finance product owners should grab this opportunity to help customers with spending and saving techniques, particularly as MoneySavingExpert currently has the monopoly on where people go for financial advice.
“Brands should be asking themselves, what can we do to make sure our customers come straight to us instead, and how can we support them across every touch point?”