Coronavirus hits UK households hard again in May: survey

(C) Reuters. A woman is seen using her phone from a window of a residential house in Westminster, as the spread of the coronavirus (COVID-19) disease continues in London

LONDON (Reuters) – The financial health of British households has deteriorated sharply this month, though not as quickly as in April when the coronavirus lockdown all but closed down the economy, a survey showed on Monday.

The IHS Markit Household Finance Index rose in May to 37.8 from a 34.9 in April, which was its lowest in more than eight years.

“The financial toll of the coronavirus pandemic and the consequent public health measures has been heavy, with recent survey data showing unparalleled declines in workplace activity and incomes from employment,” IHS Markit economist Joe Hayes said.

“It is also disconcerting to see so many survey respondents indicating concern towards job security, which could have a significant impact on consumer spending if the negative economic impact of the pandemic is protracted.”

Household incomes from employment fell at the sharpest rate since the series began in February 2009.

Despite this, Hayes said there appeared to be little sign of increased stress on household budgets, possibly reflecting a record fall in spending that was most widespread amongst those in the highest income brackets.

The Bank of England expects the economy to contract by around a quarter during the three months to June, and for there to be the biggest full-year fall in output in more than three centuries.

According to official figures, Britain’s economy shrank by a record 6% in March, when a widespread lockdown began only towards the end of the month.

The IHS Markit data was based on a survey of 1,500 people by polling company Ipsos MORI conducted between May 7 and May 10.