As we fast approach the end of the year, many UK households are now turning their financial efforts towards affording Christmas.

Christmas can put a stress on household finances at the best of times, however it would appear that Christmas 2020 may be even more of a challenge as the UK continues to battle the global pandemic.

A new report by Lowell has questioned UK respondents on their Christmas financial situation in 2020 compared to 2019.

London households set to cut back their Christmas spending the most

Christmas 2020 is set to look different to any Christmas we have faced before as the effects of the Coronavirus continue to grip our nation.

With household finances impacted due to the economic damage of the pandemic the report by Lowell¹ reveals that 30% of households will feel financial pressure this Christmas along with the areas set to reduce their spending the most this coming Christmas.

24% of households in London are set to reduce their spending significantly this Christmas followed by 23% of Bristol and 20% of households in Sheffield.

The below table highlights the percentage of households per region who are set to decrease spending significantly this Christmas:

How will people fund Christmas 2020

Payday loans, borrowing from family/friends, loans and pre-purchase Christmas schemes are set to see dramatic increases in demand this year as households struggle to cover the costs of Christmas.

The increase in these funding options is driven largely by the pressures households face to overspend.

The report reveals that 60% of households feel the pressure to overspend on presents whilst a staggering 64% feel the pressure to overspend on food.

When asked how households funded Christmas 2019 and how this compares to Christmas 2020, we see that payday loans will increase by a staggering 110%, loans to increase by 55%, whilst disposable income is set to decrease by 6%.