LONDON, April 21 (Reuters) - Households in Britain hit by
COVID-19 job losses suffered a much bigger fall in their incomes
than in France and Germany where social security is more
generous and incomes are more equal, the Resolution Foundation
think-tank said.
Forty-one percent of British households where one person or
more became unemployed saw their income fall by at least a
quarter. Only 20% of newly unemployed households in France
suffered such a large fall in income, while the proportion in
Germany was 28%, the foundation said in a report.
Unemployment in all three countries rose relatively little
last year, especially compared with during the 2008 global
financial crisis, as government furlough programmes have
encouraged businesses to keep staff on their books.
Those British households whose income fell were twice as
likely to have taken on more debt during the pandemic to cover
living expenses as German and French households.
Britain's fast vaccine roll-out means its incomes crisis is
likely to ease more quickly but the underlying weakness in its
household finances is storing up risks for the future,
Resolution Foundation economist Maja Gustafsson said.
"It's vital that households' financial position is
strengthened as we finally emerge out of the COVID-19 crisis, so
that they are less exposed when the next economic crisis comes
along," she said.
British finance minister Rishi Sunak announced on March 3 an
extension of a COVID emergency top-up of 20 pounds ($28) a week
to state benefits for low-income households, but only for a
further six months.
One-in-three British households cut spending, compared with
23% and 21% in France and Germany, the foundation said, raising
questions about the strength of the country's economic
bounce-back as the government lifts its coronavirus
restrictions.
Britain's big spending fall was linked to the country's
COVID-19 restrictions that have been tighter and lasted for
longer than in France and Germany, as well as the weak state of
household finances, the report said.
The Resolution Foundation focuses on issues affecting
lower-income households.
($1 = 0.7151 pounds)
(Writing by William Schomberg
Editing by David Millien)