London Daily

Focus on the big picture.
Wednesday, Aug 05, 2026

Coronavirus crisis has intensified UK's wealth divide, data reveals

Coronavirus crisis has intensified UK's wealth divide, data reveals

12m adults struggling to pay bills, with BAME people worst hit, official figures show

Official figures have laid bare the huge financial divide in the UK caused by the coronavirus crisis, with one in three households experiencing income cuts, and young adults and black, Asian and minority ethnic people worst hit.

In a grim overview of the nation’s personal finances, the Financial Conduct Authority said 12 million adults were struggling to pay their bills, up by 2 million since coronavirus struck in February.

The financial regulator also found that 31% of UK households had experienced a decrease in income, with affected families typically having lost a quarter of their income.

Households from black and minority ethnic (BAME) backgrounds have suffered worst financially from the pandemic. The FCA found that 37% of BAME adults had taken an income hit, and were the most likely to have been forced into reduced working hours.

Young adults aged 25 to 34 – many of whom work in bars, restaurants and the arts and entertainment industry – have been the most likely to have had a change in employment as a result of the pandemic.

The FCA found that one in five young adults were now more likely to be seeking debt advice, compared with just one in 50 in the 55-64 age group.

As fresh coronavirus restrictions spread across the UK, Citizens Advice said millions of people were in a financially calamitous position. It called for improved government support and a continuation of the £20 a week uplift in universal credit beyond spring.

The chief executive of Citizens Advice, Dame Gillian Guy, said: “With the finances of 12 million people now fragile, there’s a real possibility that new lockdown restrictions will force many people into debt this winter. It’s in the government’s power to prevent this happening. By strengthening the support for those struggling with essential bills.”

The FCA said it had put in place a package of support to ensure banks helped struggling borrowers after 31 October, the cutoff date for the final applications under the coronavirus mortgage holiday scheme.

UK Finance, which represents Britain’s banks, said 4.4m payment deferrals of some sort – including personal loans, credit cards and mortgages – had been granted since the pandemic began, but only 323,700 were still in place.

Lenders had provided a total of 2.5m mortgage payment holidays, with 162,000 home buyers still on a payment deferral on 9 October, said UK Finance.

The banks said households struggling to meet their mortgage payments could choose from one of four options: extending the length of the mortgage term, switching to interest-only from repayment, deferring payment of the interest, or capitalising the interest and adding it to the total balance outstanding.

The energy regulator, Ofgem, has told utility companies to offer struggling customers “realistic” debt repayment plans, or emergency credit if they are on prepay energy meters.

The Consumer Council for Water separately warned that the financial help offered to 900,000 households risked running dry without a long-term solution to managing water debts.

But while the pandemic has badly damaged the finances of many households, others are more robust than before the virus struck.

The UK savings ratio – the proportion of total income that is put into savings – has leapt from 6% before the pandemic to 29%, with many of those who have remained employed now flush with cash as a result of spending less on holidays and going out.

Some of that money has been poured into the property market. Figures from HM Land Registry on Tuesday revealed that house prices rose 2.5% in the year to August, with the typical property changing hands at £6,000 more than a year before.

Transaction activity has also soared, with HMRC figures showing a 20% increase in September from the month before.

The financial analyst Laith Khalaf, at the investment group AJ Bell, said: “We are now at least a two-tier nation when it comes to finances. The pandemic has served to widen the wedge between the have and have nots in the UK.

“While 2 million more people may now struggle with bills and repayments as a result of the pandemic, only a few weeks ago mortgage approvals hit a 13-year high, according to the Bank of England.

“Those who have kept their jobs and income will likely have a new cash buffer in their bank account as lockdown [in effect] imposed a spending freeze.”

Newsletter

Related Articles

0:00
0:00
Close
Spain and Morocco Trade Blame After 72,000 Migrants Enter Ceuta
Met Police Investigated Journalist Who Questioned Cambridge Professor
Badenoch Defends Tory Candidate Jailed for Antisemitic Abuse of Luciana Berger
NHS Spends £240m a Year Storing Paper Records Despite Digital Push
Apple Seeks Court Order to Stop OpenAI Using Alleged Trade Secrets
Breaking With the Past: One of the World’s Smallest Countries Changes Its Name
AI Is Remaking the US Economy, From GDP Growth to iPhone Prices
Comcast: Tied to a Chair and Hit in the Face With Cake: The Regular Humiliation Ritual at the US Corporate Giant
Aston Martin Faces Legal Threat Over £550m Rescue Deal
Conservative Party and Reform UK Face Growing Scrutiny Over Political Transparency
GMB and Public Sector Unions Prepare for Wider Debate Over Government Priorities
UK Government Faces Pressure to Address National Water Infrastructure Failures
NHS Radiographers Report Rising Racist Abuse From Patients
Breast Cancer Experts Call for Overhaul of NHS Diagnostic Approach
UK Government Reviews Prison Policy After Debate Over Capacity and Public Safety
Nigel Farage Faces Questions Over Leadership Discussions and Five Million Pound Donation
Conservative Party Faces Candidate Controversy Over Former Antisemitic Activist
UK Energy Industry Pushes for Greater Role for Domestic Oil and Gas Production
Gatwick Expansion Debate Continues as Airport Prepares for Second Runway Construction
Reform UK Wants the Royal Navy to Return Channel Boats to France
Government Faces Pressure Over Charity Funding Linked to Illegal Israeli Settlements
UK Fire Chiefs Demand Ban on Disposable Barbecues During Severe Drought
Medical Review Warns Current Breast Cancer Guidelines Miss Many Young Women
NHS Mental Health Trust Announces Twenty-Five Million Pound Service Cuts
MI6 Rated Europe’s Most Capable Foreign Intelligence Service in International Review
UK Watchdog Finds Serious Failures in Electronic Offender Monitoring System
BP Chief Warns UK Must Protect Domestic Oil and Gas Capacity
Water Supply Crisis Threatens England’s Housing Expansion Plans
UK Government Rewrites Procurement Rules to Prioritise Jobs Over Environmental Targets
English Channel Rescue Operation Saves One Hundred Seventy-Three Migrants After Boat Capsizes
Gatwick Airport Wins Legal Approval for Second Runway Expansion
UK Government Tightens Early Prison Release Scheme After Public Backlash Over Offender Freedoms
US and Japan Step In to Support the Yen in Rare Joint Intervention
The AI Pricing Problem: Companies Cannot Predict Their Own Bills
Europe’s Heat and Drought Are Now Disrupting Power, Shipping and Tourism
Apple’s OpenAI Lawsuit Becomes a Public Fight Over AI Hardware
UK Man Jailed After Keeping His Mother’s Body in a Freezer and Claiming £78,000
A SpaceX Rocket Is About to Crash Into the Moon — and Scientists Hope to Watch
World War II munitions discovered after wildfires in southern France
BP profits reach four-year high amid Middle East conflict
Europe’s Drying Rivers Trigger Power Cuts, Factory Shutdowns and Wildfire Emergencies
UK Driver Sentenced to Four Years for Staged Electric Vehicle Brake Failure Fraud
Conservative Party and Reform UK Face Scrutiny During Clacton By-Election Campaign
Ministry of Justice Reviews Early Release Rules After Public Anger Over Police Killer Cases
NHS Radiographers Report Rising Racist Abuse From Patients Across UK Hospitals
UK Banking Regulators Face Pressure After Customer Loses Fourteen Thousand Pounds in AI Voice Scam
Research Challenges Treasury Control Over UK Public Spending and Calls for Greater Local Decision-Making
Home Office Begins Four-Week Weapons Surrender Campaign Across Major English Cities
Southern England Records Driest July in Nearly Two Centuries as Drought Concerns Grow
Apple Challenges UK Government Request for Access to Encrypted User Data in Legal Fight
×