The Bank of Mum and Dad is expected to significantly reduce financial support to family members after lockdown ends, according to research from Direct Line Life Insurance.
The overall value of financial help from families is expected to fall by £1.8bn, with the average amount given per person, by family members, dropping by 27%, from £775 pre-pandemic to £567.
Like many banks, the Bank of Mum and Dad have had to withdraw some financing during the pandemic.
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Almost two million people have received less regular or a lower amount of financial help from their families since the beginning of the first lockdown in March 2020. Around £151m less has been paid out to family members since COVID-19 hit.
By early December 2020, the latest available data, nearly nine million people had to borrow more money than usual to counteract the financial impact of the pandemic, with nearly half (45%) of these having to borrow more than £1,000.
This is a 40% increase when compared to six months prior and means 2.4 million people needed to borrow more to cover their costs. As of April 2021, nearly one in six (17%) adults, some nine million people, stated the pandemic had affected their household finances.
However, while financial support has reduced significantly, the pandemic has resulted in many families becoming more reliant on each other than ever before. Nearly one in five people (19%) believe they have grown closer to their parents over lockdown, with similar numbers having grown closer to their siblings (19%) and children (21%).
This family support is even more important as, across the UK, lockdown has had a negative impact on mental health and wellbeing. Q1 2021, the latest lockdown, has seen overall mental wellbeing deteriorate compared to previous quarters, with the average life satisfaction score provided by UK adults 12% lower in February 2021 than at the same point in 2020.
Half of adults, some 27 million people believe the pandemic has affected their wellbeing, while nearly two-thirds (62%) have felt they had a lack of freedom and independence, and over a quarter (28%) said that their relationships had suffered.
Vincent Guadagnino, communications manager at Direct Line Life Insurance, said: “The pandemic has had a profound impact on all our lives. It has separated us from loved ones and vital support systems during a really difficult period and led to many struggling without the usual financial, childcare and emotional support received from their families.
“While our research shows that the financial support is likely to take some time to get back to pre-pandemic levels, it also highlights how interwoven families have become and how reliant people are on their family support system. COVID-19 has been a challenging period for many but has also emphasised how important family is and how vital it is to protect them.”