Pandemic and out of pocket

British households will have £43bn less cash available for essential spending between April and June.

Disposable income earned by UK households, once it has been adjusted for tax and benefits, will be 17% lower in the second quarter of this year, according to analysis from the Centre for Economics and Business Research consultancy.

The CEBR has calculated the monthly hit to disposable incomes will reach £14.2bn per month, meaning a monthly fall of £515 per household as workers lose their jobs, accept reduced pay or hours, or are placed on furlough.  In the majority of cases workers have seen a 20% fall in their earnings.

The CEBR predicts the pandemic will cause the deepest recession since the financial crisis, with unemployment more than doubling, with the biggest increase in unemployment  being among the lowest-paid workers.

Workers without a university degree will be hardest hit by the Covid-19 crisis, raising fears of increasing inequality across Europe, where up to 59m jobs are at risk.

Nearly 80% of workers facing job insecurity – including cuts to hours or pay, temporary furloughs, or permanent layoffs – do not have a university degree, according to new research by the consultancy firm McKinsey.

The research raises concerns that the coronavirus outbreak could widen the gap between rich and poor across the EU and UK. “Short-term job risk is highly correlated with level of education, potentially exacerbating existing social inequalities,” McKinsey said.

People at risk include retail staff, cooks as well as construction workers and office support staff, who are twice as likely to see their livelihoods under threat during the outbreak because they work in close proximity to others and have significant exposure to the public. Low-insecurity occupations include workers who either do not need to work in close proximity to others, such as accountants, architects and journalists, or whose work provide essential health services, such as healthcare staff or other essential services such as police, food production, education, public transport, or utilities. 

McKinsey warned that Europe could still face social unrest as a result of rising unemployment.  

“Societies’ inequalities are exacerbated by higher unemployment rates, as social-welfare systems cannot fully alleviate the negative effects of a loss of employment. Increases in crime rates and social unrest are also potential consequences of an increase in unemployment,” McKinsey said.

“Moreover, unemployed people are twice as likely to experience mental illness (and even more so for blue-collar workers), and they receive inpatient treatment more often,” the report added.

https://www.theguardian.com/business/2020/apr/20/british-households-face-disposable-income-fall-of-515-per-month

https://www.theguardian.com/business/2020/apr/20/uk-workers-without-degrees-face-deeper-job-insecurity-amid-coronavirus-pandemic