A survey by Progeny has found that the UK public believe it will take an average of 35 years for the country to pay off the Covid deficit.
Respondents also reported they expected to have to work for longer as a result of the pandemic and anticipated further tax increases across the board, with the younger generation expected to bear the brunt of this.
- The public think paying back the deficit will take an average of 35 years, with 24% saying it will take 50 years or more.
- British people expect to have to postpone their retirements by two years – from 64 to 66 years of age – as a result of the financial impact of the pandemic.
- Nearly two thirds (65%) think there will be further tax rises in the coming years to pay for Covid.
- 43% of respondents believed the 18-30 year-olds would carry the biggest burden and 77% of the 18-34s said the pandemic had made them more cautious about their finances.
Financial impact of the pandemic
The pandemic has had a significant impact on the finances of the UK public.
- 34% said that the pandemic had made them financially worse off
- 20% said they were financially better off
- 44% reported no financial impact through the pandemic
The majority (62%) reported they are more cautious about their finances as a result. They provide a number of reasons for this: 46% said the possibility of reduced income; 38% said job insecurity; 38% said a rise in inflation.
Nearly two thirds (65%) thought there will be further tax rises in the coming years to pay for Covid, also with the potential for new forms of taxation to be introduced.
- 71% say they think income tax will increase; 67% think a rise in capital gains tax is likely; 64% expected an increase in Inheritance Tax
- 61% think we could see the Government introduce a carbon tax
- 59% think a wealth tax could come into force
As for the appetite for the introduction of new taxes, a third of taxpayers favoured the option of the introduction of a wealth tax and 1 in 10 would like to see the government focus on a green recovery from Covid-19 through a carbon tax.
Impact on retirement
In addition to short-term financial concerns, many respondents reported long term fears about their financial security.
- Adults believe they will have to work an extra two years before retirement as a result of the pandemic, with average expected retirement age shifting from 64 to 66 years.
- 33% of the 18-34s said they would be working a lot longer before retiring, due to the Covid-19 pandemic, contrasting with 19% of the 45-54s and 8% of the 65+ saying the same
There were differences in who the public perceived would carry the biggest financial burden from the pandemic.
- 44% or respondents believed those in the 31–67-year-old age bracket would carry the biggest burden; 43% reported it would fall to the 18-30s; and just 1% said those of 68 years old and over
The younger generation perceived themselves as facing the biggest financial challenges as a result of the pandemic.
- 41% of the 18-34s said they were financially worse off due to the pandemic, this generally decreased by age until 28% of the 65+ said the same
- 77% of the 18-34s said the pandemic had made them more cautious about their finances. This is vs 60% of the 45-54s, 51% of the 55-64s, and 44% of the 65+ saying the same
Government response to crisis
The survey measured public opinion on the Government’s handling of the crisis.
- 32% felt that current economic challenges are due to the government’s poor crisis response
- 28% said the Government’s financial and economic response to the crisis has been good
- Only 13% believed the measures announced in the Budget will be sufficient to pay for Covid
Commenting on the survey’s findings, CEO of Progeny, Neil Moles, said:
“The Covid-19 deficit is now above £355bn, and as the Chancellor himself has indicated this could be a bill we are paying for decades into the future. The government has already set out its initial plans to repay the deficit through taxation, but we have to look beyond talk of raising existing taxes or introducing new ones.
“Our survey showed people think the young will pay a large proportion of the debt through taxes but paying down the Covid debt does not fix the bigger issue when it comes to young people and the impact of the pandemic, which is one of opportunity, confidence and financial stability. The creation of jobs and opportunities in the short term is more important than taxation.
Now is the chance to have a bigger conversation about stimulus, education and repairing our societies. We will be living with the impact of the pandemic for a generation or more into the future, so restoring the financial confidence in the young will be a key driver of the recovery.”
Notes to editors
Progeny is the first and only firm in the UK to bring together independent financial planning, asset management, tax, HR and private and corporate legal services.
An online survey was conducted by Atomik Research among 2,002 respondents from the UK, all employed. The research fieldwork took place on 8th March – 10st March 2021. Atomik Research is an independent creative market research agency that employs MRS-certified researchers and abides to MRS code.