The boost people enjoyed to their financial wellbeing after lockdown measures began to lift has dipped, according to Scottish Widows.
The company’s latest household finance index dipped from 44.7 in the second quarter of 2021 to 44 in Q3 2021, despite the first rise in household income from employment since Q1 2020.
However, the pace of decline remained slower than at any other time since the onset of the Covid-19 pandemic, and a far cry from the spring of 2020.
This was partially because of improved trends around job security and income.
Households also recorded renewed pessimism with regards to their financial outlook over the next 12 months. At 49.2 in Q3, this index was down from 50.3 in the previous quarter.
The youngest age groups (between 18 and 34 years old) bucked the overall trend, remaining upbeat on average (index at 56.2, up from 55.7).
Positive news during the third quarter came from the labour market as UK households experienced improved trends with regards to both job security and income from employment.
For the first time since Q1 2020, households’ income from employment rose over the quarter. At the same time, business activity continues to rise steeply, according to UK households.
The rate of growth remained close to the survey record high recorded in Q2.
Scottish Widows pensions, stockbroking and distribution director Jackie Leiper said: “UK households recorded slightly weaker trends as the post-lockdown recovery began to subside and living costs surged.
“Overall financial wellbeing and cash available to spend fell at slightly quicker rates than in the second quarter.
“However, our long-term financial planning trackers highlighted a wave of positive developments in Q3.
“Around 10% of households are now considering intergenerational planning, which suggests that Covid-19 has made more families think about how important it is to consider being financially prepared for the unexpected.
“A spark of good news also came with the reopening of the UK economy continuing to drive workplace activity too, while incomes from employment rose for the first time since the start of the pandemic.”
