More than one-fifth of usual household spending has not been possible during the lockdown, Office for National Statistics (ONS) analysis reveals.
In the financial year ending March 2019, UK households spent an average of £182 per week on activities that have since been largely prevented by government guidelines (such as travel, holidays and meals out).
This is equivalent to 22% of a usual weekly budget of £831, money that households could be saving, spending in other areas or using to cover any loss of income.
To estimate the potential impact of the coronavirus (COVID-19) on spending, and the extent to which people might be able to cut back, we have categorised household spending from before the pandemic (based on lockdown measures introduced on 23 March 2020).
Across all households, more than half (53%) of usual spending covers “non-discretionary” items such as food and housing costs. We refer to this as spending on “essentials”.
Younger households, those who are renting and those living in London spend a lot proportionally on essentials and relatively little on goods and services that have been unavailable under lockdown. This could limit their ability to cut back on spending if their income were to fall.
To help households under increased financial pressure, some companies – including mortgage providers and gas, electricity and water suppliers – have offered payment holidays on regular bills.
We estimate that 39% of household spending on essentials could be subject to a payment holiday, equivalent to £173 per week.
Essential items that cannot be cut back
Renting households spend 61% of their usual weekly budget on essentials, compared with 52% for households who own their home outright or with a mortgage.
This is largely driven by housing costs, which account for 28% of budgets for renting households and 21% for homeowners.
According to a survey by the Resolution Foundation, renters are more likely than homeowners to have fallen behind with their housing payments during the lockdown. They have been less likely to receive a payment holiday on their rent, as opposed to those with a mortgage.
Our data also show that spending on activities including holidays and eating out is proportionally lower among renters, potentially limiting their ability to manage housing costs alongside a loss of income.
Meanwhile, in households where the reference person is under 30 years old, 58% of the weekly budget goes on essentials and 19% on goods and services that have been unavailable during lockdown.
On the other hand, older households where the reference person is aged between 65 and 74 years spend far less of their budget on essentials (43%) and considerably more (29%) on activities that have been prevented.
While evidence suggests that both the youngest and oldest workers have been hit by furloughing and job losses, younger households are less likely to have enough savings to cover a loss of income and less likely to be able to cut back on spending.