London Daily

Focus on the big picture.
Sunday, Jun 14, 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
Royal Navy Takes Part in Trooping the Colour for the First Time in 350 Years
Think Tank Warns Labour's European Union Reset Could Carry Significant Economic Costs
UK Semiconductor Centre and Japan's Rapidus Forge Advanced Chip Manufacturing Partnership
UK and Japan Launch Offshore Wind Compact Backed by £9 Billion in Investment
Starmer and Trump Discuss Iran Peace Efforts and Reopening of the Strait of Hormuz
United Kingdom and Japan Sign £18 Billion Investment Partnership Focused on Clean Energy and Advanced Technology
Barclays Moves to Acquire GoHenry in Bid to Expand Youth-Focused Fintech Services
UK Lupus Patients Show Remission in NHS Genetic Therapy Trial
London Clean Air Zones Linked to Fewer Emergency Hospital Admissions for Respiratory Illness
UK World Cup Scheduling Research Suggests Energy Bill Savings From Off-Peak Usage
UK Economic Anxiety Rises Among Young People Over Long-Term Job Prospects
NHS Expands Meningitis B Vaccination Programme for School Leavers and New Students
London Ultra-Low Emission Zone Linked to Drop in Emergency Respiratory Hospital Admissions
Derbyshire Police Officer Investigated Over Alleged Use of AI-Generated Evidence in Case Files
UK Parents Back Proposed Under-16 Social Media Ban as Online Safety Concerns Grow
Four Palestine Action Activists Jailed Over Sabotage Attack on Israeli-Linked Arms Facility
Barclays to Acquire GoHenry in Push to Expand Digital Banking for Children and Teenagers
UK Government Reaffirms Defence Spending Commitment Amid Cabinet Pressure and Political Disputes
Belfast Unrest Prompts Security Review as Paramilitary Activity Comes Under Renewed Scrutiny
SpaceX IPO Pushes Elon Musk to Become World’s First Trillionaire After Record Valuation Surge
United States and Iran Near Landmark Peace Framework as Negotiations Reach Final Stages
UK Competition Watchdog Investigates Ryanair Family Seating Charges
Imperial College Study Links London Emissions Charges to Lower Hospital Admissions
Scottish First Minister Launches US Trade Initiative Ahead of World Cup Match in Boston
Fifteen Million Workers Gain Expanded Sick Pay Rights Under UK Reforms
British Retail Investors Secure Record Participation in SpaceX Share Offering
Keir Starmer and Micheál Martin Coordinate Response to Northern Ireland Violence
NHS Prepares for Major Disruption as Resident Doctors Announce Four-Day Strike
Bank of England Expected to Hold Rates as Energy Costs Complicate Inflation Outlook
Britain Moves to Ban Under-16s From High-Risk Social Media Platforms and AI Chatbots
UK Economy Contracts as Middle East Conflict Weighs on Growth
Defence Secretary John Healey Resigns Over Military Spending Dispute With Treasury
Prime Minister Keir Starmer Faces Leadership Crisis After Senior Cabinet Resignations
NHS Trust Secures Funding for AI Tool to Detect Heart Failure Earlier
Government Unveils £4.5 Billion Investment Plan for Walking and Cycling Infrastructure
Nationwide Reports UK House Prices Falling as Borrowing Costs Remain Elevated
Centre for Social Justice Says Two Million Britons Are Using Illegal Loan Sharks
UK Carmakers Warn EU Local Content Rules Could Damage British Manufacturing
UK Government Imposes Emergency Ban on Seven Potent Synthetic Opioids
Royal Navy Completes Major North Atlantic Anti-Submarine Exercise Off Norway
NHS Figures Show Nearly 3,000 Patients a Day Receiving Care in Hospital Corridors
CBI Cuts UK Growth Forecast as Middle East Tensions Drive Inflation Risks Higher
Dan Jarvis Appointed UK Defence Secretary Following Major Government Reshuffle
University College London Study Links Physical Punishment to Higher Risk of Bullying
East Midlands Railway Unveils First Refurbished Train in £60 Million Modernization Programme
RNLI Issues National Water Safety Appeal Ahead of Expected Heatwave
Climate Change Raises Subsidence Risks for Millions of Homes Across Southeast England
Manchester Advances Plans for Underground Piccadilly Station With £1 Million Funding Commitment
Anti-Immigration Violence Continues in Belfast Amid Heightened Security Concerns
UK Law Locks Great British Railways Into Public Ownership
×