Bacon sandwich or lemsip

I was feeling a little under the weather much of this week. Normally this would not be a concern, I would just soldier on, keep going.

In the current environment, with COVID cases rising again locally, everything seemed different. So despite not showing classic COVID systems, I pretty much spent the week stuck indoors my days filled with taking lateral flow tests and feeling sorry for myself.

Despite being isolated at home however, in some ways it was even easier to carry on working. If I was in the office, my colleagues would, quite rightly, tell me to get out, go home and stop infecting everyone else. There are no such concerns working remotely, there is no spreading on Zoom or Teams meetings and when you are sitting at home… bored… the computer beckons… then just one email, just one spreadsheet and you are hooked in for the day.

So what started out as good intentions to have a lemsip and get some rest, somehow seemed to evaporate by about 10am… and the day was done. Need to be stronger next time!

But, this time off, or slow down at least, did give me a bit of a chance to catch up with a few folks on affordability and some of the current trends. A few factors do seem to all be colliding at the same time.

  • End fo furlough. This finished at the end of September. Impacts appear to be slightly lower than some of the expectations at the start of the pandemic. It will however take sometime to flow through to businesses and cash flows and could impact employment, especially in some sectors
  • Universal credit cut. The £20 boost for universal credit, made during the start of the pandemic, has now been removed. It is a 25% drop in income support for some. Against a background of increasing prices this has the potential to further squeeze affordability for those impacted.
  • Increasing fuel costs. The price of natural gas has more than doubled since the spring, and reportedly an expected increase in oil prices on the way too. This will increase expenses for many consumers, especially heading into winter and put pressure on costs for businesses, which will also be passed onto the consumer. (I was reminded that with the price cap mechanism in GB, the price increases will be lagged, albeit this does not help the energy supply businesses, bit impacts there – could be only 10-20 left is the thinking if this continues).
  • End of pandemic restrictions. Pandemic restrictions seem to have been pretty much ended here now and certainly looking at the traffic (jams) on the road, people are getting back to the old ways of doing things. This may be good news for many, no-one misses home haircuts I am sure, but during lockdown, with remote working, a lot of people saved money. Getting back to the office now means extra expense on commuting, coffees, sandwiches at lunch. And, if oil prices do increase, commuting is about to get a lot more expensive too.
  • Supply chain issues. Supply chain issues in the UK have been widely reported. Whilst this is also a global phenomenon, a combination of factors apparently means the UK is more affected than most. Shortages now will likely translate to price increases in the future… inflation is now expected to increase. All this continues to put pressure on the consumer and costs (especially if you do not have a job, or your wages (or pension) do not keep pace with inflation), reducing affordability

The impacts of all these will not, of course, be seen suddenly and indeed will be different in different segments of the population. However, the factors are there, and there is a risk they can combine to stretch affordability for an increasing segment of the population, resulting in increased arrears and for those already there, more financial difficulty. It does not all seem very cheery, I agree

What is more optimistic, however, is just how much customer-focused infrastructure has been put into businesses the last few years to help with these situations. Yes, I know there is probably more on the way with the FCA focus on outcomes with customer duty, but we have come a long way already. The tools are there, we just need to make sure we use them and build on the progress to date.

So back to work then… now where is that Bacon sandwich.

Have a good weekend everyone.

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