UK consumers struggle with financial literacy in the wake of Covid-19
Published today, the European Consumer Payment Report 2021 shows the ongoing effects of the Covid-19 crisis on UK consumers. While many say they want to ensure they are in a stronger financial position before another global crisis, more than a quarter have less visibility of their short-term borrowing now than they did before the pandemic. The UK edition of the European Consumer Payment Report provides insights into the everyday lives of consumers, their spending habits and their ability to manage their finances. From savings to sustainability, download a copy for a comprehensive view of consumer finance trends.
UK consumers are failing to measure up when it comes to understanding their finances, according to Intrum’s 2021 European Consumer Payment Report, published today.
In the survey of more than, 24,000 consumers across Europe, 58 per cent of UK respondents say they want to ensure they are in a stronger financial position before another global crisis. However, more than a quarter have less visibility of their short-term borrowing now than they did before the pandemic, while 24 per cent say they don’t even want to know how much they owe.
The report shows this trend is especially pronounced among younger age groups, with 45 per cent of 22-37 year olds admitting they have their heads in the sand over their financial situation. It reflects a growing generational divide in the aftermath of the pandemic, which has widened existing financial inequalities.
Financial literacy more important than ever
While 82 per cent of UK consumers believe they received sufficient or excellent financial education, a third say they don’t understand how interest rate changes could affect their financial position and 50 per cent need help with complex financial matters.
“The Covid-19 crisis is a stark reminder of the essential role that financial education plays in helping consumers manage their money and withstand curveballs when they arise,” said Intrum UK Managing Director Eddie Nott.
The pandemic has encouraged parents to spend more time helping their children understand financial management – 54 per cent said they were more likely to do this now. However, although well-meaning parents are passing advice to their children, it may prove to be counterproductive if the parents themselves have not had a solid financial education, or do not take care to explain the nuances.
“More than half say they are more likely than they were to urge their children not to take on debt. This isn’t necessarily good advice. Managed correctly, debt supports entrepreneurial pursuits and forms an integral part of the business community and wider economy,” added Nott.
Consumers taking action on sustainability
This year’s survey shows that consumers are increasingly holding firms to account on sustainability, with 56 per cent of UK respondents saying they wouldn’t buy from a company they knew to be responsible for harming the environment.
Waste is also an issue for many – 61 per cent say they are actively buying less to reduce clutter. The younger generations and parents are at the forefront of the push towards sustainability.
Businesses need to be aware of the knock-on effects. A third of UK respondents said they would feel no guilt about paying a company later than agreed if they thought the company was unethical. This figure rises to around half for Gen Z consumers, reflecting the extent to which this cohort is willing to take action around green issues.
“While it’s true that consumer intentions don’t always translate into action, businesses would be wise to pay attention to this trend if they are to retain the loyalty of these customers,” said Nott.
The European Consumer Payment Report contains detailed information on consumer payment behaviour and attitudes. For more information, download the report here.