DP14733 Consumption in the time of Covid-19: Evidence from UK transaction data

Author(s): Sinem Hacioglu Hoke, Diego R Känzig, Paolo Surico
Publication Date: May 2020
Date Revised: May 2020
Keyword(s): Access to finance, expenditure, Income, real-time indicators
JEL(s): D12, E21, G51
Programme Areas: Monetary Economics and Fluctuations
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14733

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.