This was a week when it felt the economic stresses of lockdown really seemed to starting to show and were reported more widely.
All of this still seems to be building towards some sort of crunch point at the end of the summer, early autumn.
All of this piling more pressure on the consumer at the same time… potentially a building storm front.
- In the short term, however, the payment deferral schemes are somewhat hiding the impact. Mortgage arrears are falling, repossessions are down and personal insolvencies decreasing…. by definition, the payment holiday means even those struggling will not yet be arrears.
- Some consumers have clearly used this breathing space to pay down debt, with 1 in 3 using lockdown savings to do this… this is as much a reflection of the level of borrowing as anything else.
- With 1 in 9 people reporting they are struggling to keep up with household bills there are concerns around whether this will cause a spiral of debt for some folks once the support ends.
It is not necessarily all bad news for everyone though, there were some brighter spots showing a bounce back somewhat quicker than expected.
- The 2nd hand car market, prices see to have returned to more normal levels, as the economy gets moving and people turn to driving rather than public transport… good news for motor finance (and maybe even oil prices) longer term.
- Retail sales seem to be returning, with what seems to be a sustained movement to online too. (Although CFO’s reportedly do not seem to be that prepared should sales do not return to previous levels).
- Digital and touchless processing also continues as a running theme, with a move to cashless payments, in part due to fears regarding COVID, although this will also help the velocity of payments, hence the economy too.
So this is starting to maybe be a story of polarisation. Those that are impacted negatively could be impacted significantly, but many may not be impacted at all…. one to watch closely and see how it develops.
Lastly, on a more personal note, I was sorry to see the closure of STA travel. For many of us, this was the travel agency we booked and travelled much of the world when we were younger and could (actually) travel… good experiences and many memories, they will be missed.
Have a good weekend everyone…. @chris_w_tweet