COVID-19 and Households’ Affordability: What Scenarios?

The Centre for Economics and Business Research (CEBR) has estimated that UK households’ disposable income will decrease by 17 percent in the second quarter of 2020; unemployment will double, with the biggest increase among low income workers; and the benefits plan that the UK government is about to deploy is likely to be insufficient to offset these costs.

Said differently, the COVID-19 pandemic is likely to raise affordability issues and profoundly affect consumer patterns and spending capacity, with effects that could be temporary or permanent, depending on factors that we will discuss below.

More specifically, we discuss the affordability issue by offering a qualitative explanation of how it may be triggered and what repercussion it may have, depending on the effectiveness of the measures adopted by the policymaker to fight the pandemic.

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