Published On: Fri, Aug 21st, 2020

Consumer confidence to fall as furlough scheme ends – prepare for redundancy | Personal Finance | Finance

Featured Offers

Legal Notice: Product prices and availability are subject to change. Visit corresponding website for more details. Trade marks & images are copyrighted by their respective owners.


Consumer confidence may have increased in recent weeks but many feel that this will be short lived as the furlough scheme comes to an end. Peter Meyler, the Head of HR Analytics & Consulting at Barnett Waddingham, noted that the general mood among the population remains firmly negative.

As he detailed: “Hopes of recovery have been dampened this month as confidence continued to stagnate. While brighter days may be ahead, reflected in the slight uplift in confidence about their financial situation, UK consumers are experiencing the ever increasing storm clouds of a recession and surging job losses.

“With the end of the furlough scheme looming large on the horizon, employers are starting to run out of road and will be forced to make final decisions about redundancies very soon because of the time needed for statutory consultation.

“Many consumers are also employees so it’s unsurprising they are feeling on edge.

“While the Government’s job retention scheme has been a lifeline for employees whose jobs were suddenly put on ice in March, many may be left out in the cold when the scheme ends on October 31, anticipating redundancy, or being asked to reduce their hours, take a pay cut, or reduce their benefits.

READ MORE: ISA transfer warning: Providers may not accept your funds

“And with the newer strategy of imposing localised lockdowns, it raises the question of how employees will cope when they are yet again confined to their homes.”

While the coming months will be tough, it is imperative that effective communication between employees and employers is exercised.

Peter went on to highlight that while dealing with short term obligations will be painful, employers must keep long-term plans at the forefront: “Employers will have a swathe of business, financial and operational concerns at the moment, but it’s absolutely vital that employee communication, engagement, wellbeing and support are priorities for them.

“If employers are transparent about any bumps in the road ahead, employees can better prepare mentally, emotionally and financially for their futures. Good engagement also helps create longer-term loyalty and support, resulting in an ultimately better performance at work. Confidence will return, but it’s down to stronger collaboration and sustained Government support to lift public mood.”

DON’T MISS: 
Pension values may drop by 80billion if state proposals are introduced [INSIGHT]
SEISS warning: HMRC data shows ‘devastating’ gaps in support [WARNING]
Savings alert: How to ‘recession-proof’ your finances [EXPERT]

Savers and workers will also have their part to play in keeping the country afloat in the coming months.

Jason Hollands, the Managing Director at Tilney, dove into some of the specifics of the index, noting what families in the UK need to do to prepare for a tough recovery: “Consumer confidence has remained unchanged since July at 27 more than two months on after non-essential shops reopened and lockdown restrictions eased significantly.

“Rishi Sunak’s increasingly popular ‘Eat Out to Help Out’ scheme has also gone down well among consumers, with high street eateries seeing a marked increase in mid-week diners since the start of August, though many businesses have reported a sharp drop off in trade on the days the scheme isn’t running.

“However, despite the slight lift in consumer’s personal finance score for the next 12 months (+1 on July), this should be taken as short rather than long-term optimism.

“In recent months, economic turmoil has had a profound impact on UK households and painted a gloomy picture of financial pessimism, further indicated by the general economic score during the last 12 months (-62); that’s 28 points lower than in August 2019.

“While the economy has been growing again since May after a very sharp contraction during the lockdown, rising unemployment is a major risk to a consumer spending led recovery, especially once the Government’s furlough scheme comes to a close in October.”

In Jason’s concluding comments, he detailed what families need to do: “Now’s the time for households to take stock of their financial situation and plan for the unexpected.

“Many households have built up excess savings during the lockdown when day to day spending was curtailed, which can help provide a financial buffer.

“The value of many people’s longer term savings, such as pensions and ISAs, has also been severely impacted by the pandemic, and so now is the time to take stock and get some professional help from an adviser to understand the implications.”

Rishi Sunak and the wider government have issued several support measures in recent months, which have been updated and extended many times.

Schemes such as SEISS and the Coronavirus Job Retention have undoubtedly helped millions but they will all come to a close by the end of the year.

Many fear that as the government “taps” are turned off, there may be a wave of redundancies as employers struggle to afford to keep staff on.



Source link


Clickbank Guide & Tools