More than half of UK households fear losing savings in Covid crisis

More than a third of households in the UK have not managed to put aside any money since the first coronavirus lockdown began last year, and more than half are worried about running out of savings, a survey has found.

Despite Bank of England figures showing record levels of cash flowing into deposit accounts, many households are struggling with lower incomes and are eating into their savings.

The latest household financial confidence tracker, for Comparethemarket, found 52% of those surveyed were spending savings and 53% were worried they would run out of money.

Of those with families, more than a quarter said they had struggled to pay bills in the past week, while 16% of those with no children at home said the same.

Almost 700,000 driven into poverty by Covid crisis in UK, study findsRead more

The same proportions said they felt less financially secure now than in previous lockdowns, while 10% of families said if lockdown restrictions continued beyond April they were worried they would not be able to pay their mortgage or rent.

Ursula Gibbs, the commercial director of Comparethemarket, said: “Although the vaccine rollout is a much-needed light at the end of the tunnel, unfortunately, for many families the financial impact of coronavirus will be felt long after lockdown lifts.

“Families with children at home are particularly affected, and many are more concerned now about their ability to pay bills and make ends meet than at any other point in the past year.”

Research from the Office for National Statistics, released on Thursday, showed that by December 2020 more than 9 million people had borrowed more than usual since the pandemic began.

Laith Khalaf, an analyst at the finance firm AJ Bell, said: “There’s a pandemic paradox at the heart of personal finances in the UK, with signs of both financial distress and excess savings at the same time.

“It is clear that the young, the self-employed and those on lower incomes have borne the brunt of the financial damage inflicted by the pandemic. But more affluent households with steady, undisturbed income streams have found themselves awash with cash, as spending options have been severely curtailed by ongoing lockdowns.”