Economists are divided over the shape of the coming recession. Will it be V-shaped, that is, a sharp decline followed by a rapid rebound? Or U-shaped, with recovery taking longer to arrive? Or even W-shaped, with a second slump following the first? But there is assent on one point. The income inequalities that opened up in the recession of the global economic crisis over a decade ago are set to become wider, as a result of the latest pandemic.
These problems may be aggravated if Britain fails to achieve a satisfactory agreement for its future relationship with the EU. Whatever the outcome of these talks, the widening of the wealth gap will have an impact on the outlook for the housing market.
Some households have not taken a financial hit from the lockdown. They are saving more, and even repaying debt. Others are struggling. Office for National Statistics (ONS) figures show that the number of people claiming Universal Credit or Jobseeker’s Allowance in May increased to 2.8 million, which is 1.5 million more than in January. This also marked a 126% increase since March and does not bode well for the future level of unemployment.