The Covid-19 crisis is hitting hard the finances of millions of households across the UK and perhaps billions more globally.
In the UK, surveys suggest more than half of all households are working fewer hours than before the crisis. Within this, more than 6 million workers have been furloughed, or almost a quarter of all employees. More than 1.5 million more may potentially have lost their jobs, judging by new universal credit claims.
This means about a third of the UK workforce are currently either under-employed or unemployed. These are historically unprecedented levels of inactivity. And this is, inevitably, taking its toll on household finances.
The loss of their job, or a fall in the number of hours they work, means that millions of households are facing a cut, often a significant one, in their take-home pay. That is despite the cushioning effects of the government’s furlough scheme, the mortgage holidays extended by banks and other important initiatives to support household incomes.
Surveys suggests around 20% of households think it is certain or very likely they will face significant financial difficulties as a result of coronavirus. Moreover, it is clear those hardest-hit are very likely to be the lower-paid, including young people and women. These groups also tend to have smaller savings on which to draw to cushion the financial blow.
This hit to household finances is being compounded by a second crisis. This crisis does not have anything like the immediacy or severity of the Covid-19 crisis, but is much longer-lived and risks making a precarious financial situation treacherous for many households. This is the UK’s numeracy crisis.
Remarkably, about half of the UK adult population have numeracy skills that are no better than those of a primary school child. Worse still, number skills across the UK appear to be deteriorating over time. The UK is the only OECD country where levels of numeracy among those aged 16-24 are lower than those aged 55-64.
It is well-evidenced that numeracy and financial literacy are intimately interlinked. Without confidence in numbers, it is very difficult for people to navigate their finances, whether it is drawing up a weekly balance sheet of incomings and outgoings, or understanding the annual percentage rate (APR) on their loans. In my travels across the UK, it is clear the numeracy crisis is adding greatly to levels of debt and depression.
That bodes ill when it comes to managing the hit to finances currently facing millions of households. The half of the population least confident with numbers are also most likely to suffer the largest hit to their incomes. As the twin crises have collided, the poor, the young and the most vulnerable households are left facing double jeopardy.
Yet, at the same time, these twin crises may also present an opportunity – an opportunity to improve people’s number skills in a way that would in turn help them navigate the financial rapids they are currently facing.
Today is National Numeracy Day, the third festival of numbers organised by the charity National Numeracy (of which I am vice-chair). As well as raising awareness of the UK’s numeracy crisis, the charity offer tools to improve people’s number skills and confidence including the National Numeracy Challenge. Give it a go; it takes only 10 minutes.
You can see if your maths skills match your expectations, and if not get practical advice. It is about understanding percentages, spotting best-buy deals and making the most of your money, not algebra and trigonometry.
Taking the challenge – as 300,000 people have already done – demonstrates, conclusively, that there is no such thing as having a “maths brain”. We all do; it just needs the tools and the time to make it tick.
In normal times, with demanding jobs and lives, it is hard for people to find the time (and the inclination) to brush up on their number skills. And there is evidence some people may systematically overestimate their ability with numbers. But these times are anything but normal. Facing stretched finances, and with at least some people having a larger-than-normal amount of time on their hands, a window of opportunity may have opened to invest just a little bit of that time in number skills.
This could help households steer a safe course through the current financial rocks. It would develop the workplace skills useful for jobs and pay rises. And, for those like myself with school-age children, it might even help alleviate the daily stress of acting as a part-time maths teacher.
We are often told never to waste a crisis. Facing twin crises, we should use one to help ease the stress on the other. After your daily Joe Wicks, what better time to give your maths brain a quick workout than on National Numeracy Day?