London Daily

Focus on the big picture.
Monday, Aug 17, 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
Sarah Ferguson Reportedly Retreats to Late Ex-Boyfriend's Swiss Chalet
Cristiano Ronaldo and Georgina Rodríguez Sign Prenup Protecting Their Separate Fortunes
Thieves Steal Antonello da Messina Renaissance Masterpieces From Sicilian Museum
Better.com Founder Who Fired 900 Employees on Zoom Is Ousted as CEO
Italian Speed Camera Issues Nearly 32,000 Fines in 10 Weeks, Worth More Than €3 Million
AI Manager at San Francisco Store Recommends Firing Human Employee
Google Launches Pixel 11 With Gemini AI at the Center of Its Hardware Strategy
Campaigners Press Government to Strengthen Rights for Four Million Gig Workers
Government Considers Higher Private Rents to Spread Asylum Accommodation Across UK
UK Moves to Protect Historic Pubs From Conversion Into Housing and Offices
Nigel Farage Wins Clacton By-Election to Return to House of Commons
British Manufacturers Report Rising Cybersecurity Threats Across Industrial Supply Chains
Royal Navy Increases Monitoring of Russian Ships in UK Waters by 25 Percent
England Adds More Than 350 Medical Training Posts to Strengthen NHS Capacity
NHS Waiting Lists Over 52 Weeks Rise by More Than 11,000 Patients
Brent Crude Near $88 Raises Fresh UK Energy Cost Concerns
UK Treasury Warns Prolonged Strait of Hormuz Disruption Could Cut 2027 Growth to 0.3 Percent
UK Economy Grows 0.4 Percent in Second Quarter as Energy and Inflation Risks Persist
UK Heatwave Triggers Emergency Alert as Government Unveils £65 Million Farm Support Package
Reform UK Unveils Plan to Cut Welfare Spending by More Than £50 Billion a Year
Prime Minister Andy Burnham Praised Extinction Rebellion for Doing a 'Great Service'
UK Wildfire Phone Alert Triggers Backlash as Users Switch Off Emergency Warnings
Heathrow Roads Reopen After Burst Water Main Floods Access to Terminals 2 and 3
Former NBA Players Enes Kanter Freedom and Royce White Say They Will Enter 2027 WNBA Draft
Former Cambridge Professor Jason Arday Found Dead Days After Resigning Amid Plagiarism Row
US Appeals Court Rules AI Agent's Website Actions Are Legally Attributed to the User
France's Constitutional Council Blocks Social Media Ban for Children Under 15
Liechtenstein Changes Royal Succession Rules to Allow Women to Inherit the Throne
Women Allege Rape and Sexual Abuse at British Army College for Teenage Recruits
Minnesota: Two independent investigators posed as Muslims (one wearing a burqa) and showed how they could vote in elections without identification.
UK Prime Minister Andy Burnham Takes Regional Tour to Highlight Local Infrastructure and Environmental Problems
Nigel Farage Wins Clacton By-Election to Return to the House of Commons
Bank of England Warns Rising Inflation Could Squeeze UK Household Incomes
UK Government Announces £65 Million Aid Package for Farmers Hit by Severe Drought
UK Economy Grows 0.4% in Second Quarter Despite Energy Market Pressures
UK Issues Emergency Alert as Severe Wildfires Spread Across England and Wales
UK and Finland Discuss European Defence and Continued Support for Ukraine
Nigel Farage Wins Clacton By-Election to Return to the House of Commons
UK Government Deploys Military to Help Fight Wildfires and Bans Disposable Barbecues
UK Records Hottest Day of the Year as Fifth Summer Heatwave Peaks in Southern England
UK Condemns Houthi Actions and Warns of Red Sea Threat to Global Trade
UK and Solomon Islands Open Wildlife Photography Exhibition in Honiara
UK Small Businesses Face Continued Cash Flow and Tax Pressures
Greatham Marsh Restoration Restores Tidal Wetland in Hartlepool After More Than 200 Years
UK Health Regulator Urges University Students to Check Meningitis and Measles Vaccination Status
Mining Remediation Authority Completes Major Ground Stabilization Works in Scottish Community
UK Food Crime Investigators Seize 33 Tonnes of Illegal Food in Multi-Agency Operation
Technical Qualification Uptake Hits Record High as Advanced Mathematics Results Improve
UK Summer Temperatures on Course to Challenge Long-Standing Records, Met Office Says
UK Farmers Bring Forward Cereal Harvests as Drought Threatens Yields
×