The geographic impact of the pandemic on household spending

This 2020 report published by the Institute for Fiscal Studies investigates the impacts of the Covid-19 pandemic on household spending. Specifically, it provides insights into the effects of lockdowns and other health restrictions on spending levels across different geographical areas of Great Britain. It therefore offers data on consumer behaviour, with implications for place managers, local authorities, and retailers.

Date added 17 August 2021
Last updated 17 August 2021

This report investigates the impacts of the Covid-19 pandemic on household spending, looking at differences across geographical areas of Great Britain and business sectors. The study draws on data from the budgeting app Money Dashboard, referencing this to a database of public health restrictions by local authority over time, as well as Google mobility data, to make inferences about the differing impacts of pandemic restrictions on spending and recovery levels, across different geographical areas. The report, therefore, offers insights into consumer behaviour during different time periods during the crisis, with implications for place management, retailers, and local authorities.

Key study findings – presented visually in graphs and charts throughout the report - include the following:

  • The first lockdown had an enormous impact on household spending, with the second English lockdown having more modest effects, due to less stringent restrictions and businesses showing more adaption and innovation.
  • The biggest declines in spending during the initial lockdown were in the South of England, which has also seen the weakest recovery levels since.
  • The decline in the South was driven to a large extent by Londoners, whose spending declined to around 40% of pre-pandemic levels in April, rising to around 10% less than pre-crisis by November, due to less spending on things like restaurants and recreation.
  • At the time of study, spending in Wales and Scotland had recovered to roughly pre-crisis levels.
  • Higher-paid and less-deprived areas saw a larger fall in spending since the pandemic, than in other more deprived areas.
  • There is evidence of consumers switching their spending between sectors, as well as between bricks-and-mortar retailers and online shopping, which blunted the impacts of the pandemic on overall expenditure to some extent.