Renters and self-employed hit hard by Covid-19 lockdown

What does the chart show?
It shows that those who rent — or own their property with a mortgage — have suffered disproportionately in terms of household income from the economic impact of coronavirus, compared with employees and those who own their property outright. The research, by the Office for National Statistics (ONS), also found that the self-employed took a greater financial hit in income than employees.

How badly have these groups been hit?
Very badly, according to ONS, which investigated personal and economic wellbeing in the UK from October 2019 to April 2020.

It found that the self-employed were far more likely to report a loss in household income than employees. Sixty per cent of self-employed people saw their income fall between April 3 and April 30, compared with 22 per cent of employees. Over the same period almost a quarter of self-employed people (23 per cent) reported having to use savings to cover their living costs.

Meanwhile, a third of the self-employed reported having to work reduced hours during the first two weeks of lockdown, and a far greater proportion reported the closure of their place of work.

The ONS said that even when it analysed the data by controlling for differences in income, age and other characteristics, the self-employed had worse expectations for their household finances in the year ahead than employees.

Renters and those who owned property with a mortgage were also found to be experiencing much more financial insecurity than those who owned outright. People with a mortgage were the most likely to say they would not be able to save money within the next 12 months. The ONS also found that renters were significantly less likely to be able to save in the year ahead than those who have a mortgage or own their home outright, after controlling for demographic factors.

The differences are partly explained by the fact people who own their home without a mortgage tend to have much more household income than renters or those who do not own outright. Renters had a typical household income of £33,700, which was £16,700 lower than the average income for those who own their home, the ONS said.

What has been the personal impact on those hardest hit?
People who worried about their personal finances and work were much more likely to be experiencing increased anxiety and to be less happy, the ONS reported.

The ONS measures the nation’s personal wellbeing by asking people to evaluate, on a scale of 0 to 10, how satisfied they are with their life overall. In the two weeks after lockdown, between March 27 and April 6, it found that happiness ratings were significantly lower for those who believed their household financial situation would get a lot worse.

These people reported happiness levels of 5.48 on average compared with 6.79 among people who believed their finances would stay the same or 7.08 from people who thought it would get a little better. Meanwhile, those who thought they would not be able to save money in the next year registered anxiety levels 33 per cent higher on average than those who thought they would.

Is it only people facing particularly hard circumstances who are feeling anxious?
Not at all. Many people are. The ONS research revealed the sheer scale of both the financial and mental health crisis the country is going through. It found nearly half (49.6 per cent) of people aged over 16 in Great Britain reported “high” anxiety between March 20 and 30. That equates to more than 25m people. In comparison, the high anxiety level in October to December 2019 was around 21 per cent. Overall, 56 per cent of people said Covid-19 would cause problems for their household finances to some degree.

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