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UK pay and spending shrinks in year of pandemic

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·Contributor
·2 min read
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Domestic tourists enjoying the scorching hot weather on the beach, some with deck chairs, with the world famous Blackpool Tower in the background as temperatures in the country are expected to soar this week on 7th September, 2021 in Blackpool, United Kingdom. Temperatures in the UK are predicted to soar to highs of 29 degrees celsius, coinciding with a rise in daycation and staycation domestic tourism in the country as a result of Covid-19 precautions that make foreign travel increasingly costly and difficult. (photo by Daniel Harvey Gonzalez/In Pictures via Getty Images)
UK staycations are on the rise. Lower spending on international holidays, which included accommodation, travel and food, accounted for half of reduced spending in the highest income households. Photo: Daniel Harvey Gonzalez/In Pictures via Getty

UK households reduced their spending by an average of £109.10 ($150.85) per week during the coronavirus pandemic, while they also struggled with a fall in income, new research has shown,

According to data from the Office for National Statistics (ONS), richer households saw a bigger cut to spending than poorer households during the year to March 2021.

Restrictions on buying certain goods and services during the pandemic were part of the cause of the 19% spending drop across the country, as well as a fall in household income, and a shift to home working.

At the height of the spring 2020 lockdown, more than one-fifth of usual spending was largely prevented, the ONS said.

Lower spending on international holidays, which included accommodation, travel and food, accounted for half of reduced spending in the highest income households, compared with just a third for the lowest income households.

Read more: Holiday spending doubles among Brits after lockdown roadmap announced

Reduced spending on restaurants and hotels, recreation and culture, and transport also contributed most to the decline in overall spending for all income groups.

In contrast, the highest income households saw spending on housing, fuel, and power rise during the pandemic, while the poorest households saw outgoings in this area fall.

Chart: ONS
Chart: ONS

In addition to this, the poorest households were the most likely to see their income fall during the pandemic, with 42% of workers in the bottom quintile reporting a drop in income during the period.

Workers in this group were more likely to have been furloughed and less likely to be able to work from home.

The data highlighted that workers paid less than £20,000 a year were more likely than higher earners to be furloughed and use their savings to cover living costs.

Read more: Office return lifts central London retail footfall but UK gloom not over

While both spending and income fell for many Brits, people on average found it easier to make ends meet, with the proportion of people reporting difficulty falling by six percentage points from 34% to 28%.

But the ONS said this still varied across different groups. The self-employed, those from ethnic minority groups, and those aged under 30 all had a harder time making ends meet in the year to March 2021 than the population as a whole.

Watch: Should I pay off debt or save money during the coronavirus pandemic?

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