Households’ financial concerns have reduced but remain higher in London
Since the pandemic began in 2020, the impact on people’s financial situation, on average, has been a lot less severe than originally feared. A lot of this has to do with government support, which has buffered the economic shock for individuals and businesses. The situation is of course different for every household (see e.g., February 8 here). However, even at its highest, only around 23% of people said, in ONS’s weekly Opinions and Lifestyle Survey, that “My household finances are being affected” by COVID-19.
By July 2021, that figure had come down to an average of 15% for all people in Great Britain. But the regional patterns are nothing like uniform.
The chart above shows, on the X-axis, the average number of furloughs in each region as a proportion of total employment in 2020; and on the y-axis, the percentage of people who said that their household finances are being affected by COVID-19. The black markers in the top right hand corner show the situation in January 2021, when many more workers were still on furlough and many more people were concerned about their finances. The cyan blue markers show the situation in July 2021.
What is reassuring, from a data perspective, is that the number of people reporting financial concerns seems broadly consistent with indicators of economic activity in each region. Putting Wales aside, in January 2021, there was a clear correlation between the furlough rate and the number of people concerned about their finances. Similarly, in July 2021, the North East had only around 8% of people saying that their household finances were being affected, while the estimated furlough rate in July there was also among the lowest in the country (at around 8%).
The metrics on people’s concerns can be somewhat volatile, so it will make sense to look at the Y-axis again once a few more weeks have passed. However, one pattern seems to be repeated in most data out there: London’s recovery is taking a very different shape to other places in Britain. While here, too, the number of furloughed people and the number of people concerned about their finances has come down, at least in July both figures were still stuck at significantly higher levels than the rest of the country. It remains to be seen what consequences this has for the “levelling up” agenda.
* July furlough rates modelled based on Google mobility index for “Workplaces”, using non-weighted averages across unitary local authorities and counties within each NUTS1 region. For the months for which actual furlough data is available (March 2020 to May 2021), the R2 between the Google “Workplaces” index and furlough rate, by NUTS1 region, is 79%.