End of furlough could lead to financial challenges for families

With the Coronavirus Jobs Retention Scheme, or ‘furlough’, coming to an end in September, there is a great deal of uncertainty about the impact on the jobs market.

One group likely to face significant concerns as the furlough scheme is phased out before closing are parents.

According to the latest Household Confidence Tracker from comparethemarket.com, a quarter of families with children at home are worried about their employment and financial situation as furlough draws to a close.

By way of comparison, only 9% of households without children expressed similar concerns.

The furlough scheme is already winding down, with employers contributing 10% towards the cost of furlough this month. The scheme will end entirely on 30th September 2021.

The research found that 41% of families with children at home want the scheme extended beyond the planned dates, mainly due to the likely impact on household finances.

If the end of the furlough scheme will result in unemployment, 55% of families with children at home said they would have to take on more debt, and 61% would struggle to afford the weekly shop.

64% of parents said they are concerned about their ability to pay bills, 46% are worried about affording childcare, and 64% are worried about finding another job once the furlough scheme ends.

Households with children already feel the financial squeeze, as 28% said they found it difficult to pay their bills in recent weeks. A similar proportion is concerned about their ability to make ends meet soon.

However, there is a more optimistic outlook, with 33% of families anticipating an improvement in their financial circumstances by the end of the year.

44% of these optimists plan to save more and spend less during the coming months, and 32% say they are confident the UK economy will be resilient as the UK recovers from the pandemic.

Ursula Gibbs, director at comparethemarket.com, said:

“The furlough scheme has been a lifeline for many households during the pandemic. However, with the new changes that came into effect this month, employers now must start covering some of the payslip, which could lead to a rise in redundancies.

“Families with children at home could be particularly affected, and many in this group are concerned about the financial impact on their households.

“However, there is some good news for families in the longer-term, as a third believe their finances will have improved by the end of year compared to only a quarter of those without children. As the UK economy fully opens when restrictions lift this month, many also believe the UK will be in a strong position economically as life can hopefully return to normal once again.  

“For those struggling, there are steps people can take to help manage their money day-to-day. Working out where to cut costs by switching household bills can often save hundreds of pounds. Small steps can make a big difference when it comes to budgeting and financial wellbeing.”