As the rates of infection are beginning to drop in the UK, alternative banking solution, Suits Me, look at how unemployment levels have impacted spending during the pandemic.
The impact of the COVID-19 pandemic can be seen across economies around the world, including the UK, with a 22% increase in the number of people claiming benefits through the Department of Work and Pensions (DWP).
Before the pandemic, the average number of people receiving DWP payments stood between 3% and 5%. However, by April 2020, one month after the lockdown was introduced, the number of people claiming benefits sharply rose to 9%. This percentage has seen steady growth and now stands at 27%.
Despite the government’s efforts to support businesses across the UK through job retention schemes, the increase in the number of people receiving payments through the DWP is likely due to businesses being required to close their doors. The financial impact of no income on businesses around the UK meant cost-cutting measures had to be introduced, including making staff redundant.
Additionally, the data also revealed that the average amount of money being paid into accounts by the DWP increased by around 80%. There could be several reasons for this, including the freeze on budgeting loans and advance repayments. Plus, in April 2020, the government increased the standard living allowance by £20 per week in a bid to support families and individuals with their living expenses during the pandemic.
This boost in income provided by the DWP is reflected by the average amount of money spent by consumers, which has seen a significant increase of 55% since the first lockdown in March 2020. This additional spend could be due to payment holidays offered by various companies that provide credit-based products and services. Plus, the extra £20 a week from the DWP.
Before the pandemic, around 23% of all transactions were conducted online compared to in-store. However, the closure of shops and the introduction of lockdown has dramatically shifted the way transactions are conducted – with 41% now taking place online. However, the data revealed no real change in the types of payments conducted – including card purchases, ATM withdrawals, and bank transfers – before and during COVID-19.
The UK has seen a significant increase in the use of Bitcoin and other cryptocurrencies. According to The Guardian, there were approximately 200,000 transactions made with Bitcoin in September 2017 – up from just over 100,000 the previous year. This is an excellent sign that this emerging trend may be taking off worldwide!
The rise in the use of Bitcoin and other cryptocurrencies comes when people are trying to find ways around strict government regulations on spending; https://swyftx.com/au/, for example, is an app that allows its users to safely buy and sell cryptocurrencies such as Bitcoin, Litecoin, and Ethereum.
The app allows users to convert their cryptocurrency into fiat money to spend it in the same way as normal cash – https://swyftx.com/au/. This is a significant development because people are no longer required to keep large amounts of Bitcoin or other cryptos if they want to use it for spending.
Richard Lynch, Managing Director at Suits Me, commented: “It’s clear that there’s been an increase in the number of individuals relying on support from the DWP since COVID-19 hit the UK. However, we were shocked to see that there was such a large increase of 80% in monthly consumer spending since March 2020. We believe that this is down to individuals being awarded more by the DWP to cover housing and living expenses and payment breaks being offered to borrowers on credit products.”
