Working Paper: CEPR ID: DP14733
Authors: Paolo Surico; Diego Knzig; Sinem Hacioglu
Abstract: Using transaction data from a large Fintech company, we document a decline of 40% to 50% in the spending of British households during the Covid-19 crisis. The fall is concentrated in services such as retail, restaurants and transportation. The initial rise in on-line shopping and groceries purchases has been subsequently reverted. Income reductions have become far more frequent, with a median decline around 30%. The share of borrowers facing financing issues has increased significantly for both secured and unsecured lending. Consumption and income inequality have surged, with the most economically vulnerable groups experiencing the largest percentage decline. Mortgagors and higher earners in London record the most sizable pound change.
Keywords: Realtime indicators; Expenditure; Income; Access to finance; Inequality
JEL Codes: D12; E21; G51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| lockdown measures (P37) | consumer spending patterns (D12) |
| income changes (D31) | financial pressures faced by households (G59) |
| COVID-19 pandemic (H12) | household consumption (D10) |
| COVID-19 pandemic (H12) | household income (D19) |
| financial distress among households (G59) | income reductions (J65) |
| government interventions (H53) | consumer behavior (D19) |
| COVID-19 pandemic (H12) | consumption and income inequality (D31) |