When asked to predict the outcome of 2020, I’m sure many would not have responded with a global pandemic! But alas, as we reach our eighth month of lockdown measures, the new Coronavirus has disrupted both our daily lives and the judgment process, as I have clearly seen in the analysis of Registry Trust data on monetary judgments in the UK and Ireland.
As part of Registry Trust’s aim to share ‘public data for the public good’ to inform responsible lending and borrowing, we are working hard to understand the correlation between the trends we are seeing in the data coming out of our Register of Judgments, Orders and Fines, and the wider economy. I therefore wanted to take the opportunity to take a look at the statistics we have published for the first three quarters of the year to identify how lockdown measures have altered judgment levels, the potential reasons why, and what this means in a wider context. It must be noted that the measure of judgments has not been adjusted for the population, therefore comparison between regions may be skewed by population density.
Not only has COVID-19 had detrimental effects on individual health and health providing services, its economic impact has the potential to be more financially damaging than the 2008 Global Financial Crisis. 2020 has been characterised by significantly reduced judgment rates across every region compared to 2019, therefore comparison to prior years would not tell much of a story, other than that things have significantly changed.
Within England and Wales, judgment levels remained steady from January to March, followed by a drastic decrease in across all regions in April, continuing through May and June. May 2020 was characterised by the lowest level of judgments in 2020, with the South East registering only 4,250 judgments, compared to 14,074 in May of the previous year. Likewise, May 2020 registered 1,633 judgments in Wales, compared to 6,508 the month prior, and 6,545 the year prior.
The maps above highlight a distinct correlation between the introduction of lockdown measures and reduced judgment levels. As discussed in an earlier blog, this is attributed to protective measures implemented by the government to protect the most financially vulnerable, and due to the partial closing of courts thus limiting the number of judgments processed. This decline is not attributed to improved financial stability within regions, with the pandemic expected to widen the financially stable: unstable dichotomy. It is possible that judgment levels will further increase in regions with already high pre-pandemic levels.
Interestingly, as lockdown measures eased on July 4th and society begun its journey to normality, judgment levels rose. Between June and October, judgment levels more than doubled in all regions excluding the North East and East Midlands. Judgments between June and July rose particularly fast, potentially due to a backlog of judgments in the courts.
Note: the scale differs to that of England and Wales due to the reduced number of judgments.
Similar is the story with Scotland and Northern Ireland who entered their first day of lockdown on March 24 and 28 respectively. In Northern Ireland, judgment levels decreased from 715 in March to 184 in April, reaching only 395 judgments in October (still 45% lower than March levels).
Judgment levels in Scotland in July reached 1,714 compared to only 162 the previous month, and 1,216 in the following month. As with England and Wales, this could be attributed to a backlog of judgments once the courts re-opened with the loosening of COVID restrictions. Judgment levels from August to September decreased to 1,186, followed by an increase of 100 to 1,286 in October. With the courts back open and processing a backlog of judgments, it is possible this rise in October is attributable to an increase of consumer indebtedness created though the pandemic.
Unfortunately, the second national lockdowns will carry a second wave of financial hardship for many. While policy makers continue to implement protective measures through schemes such as Furlough, it is expected that levels of indebtedness will rise as consumers become unable to pay their debts that were exacerbated through the pandemic.
It is therefore more important than ever to become financially fit, be that through reduced spending or through receiving loans from reputable and low-risk sources only.
To help keep everybody informed, we are planning to use our granular judgment data to monitor regional recovery from COVID-19, and will update the Financial Stress Tracker as we go.