London Daily

Focus on the big picture.
Friday, Jun 26, 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
Robert Jenrick Defends £5 Million Donation to Nigel Farage Amid Political Scrutiny
Plymouth Museum The Box Wins 2026 Art Fund Museum of the Year Award
UK Government Faces Backlash Over Plans to Use Former Military Sites for Asylum Accommodation
Labour Party Faces Pressure Over Cabinet Stability as Senior Figures Clash on Policy Direction
Heathrow Airport Forecasts Passenger Decline in 2026 as Costs and Climate Disruption Mount
UK Energy Regulator Approves Expansion of Long-Duration Storage to Boost Power System Resilience
Crown Estate Reports Third Consecutive Year of £1 Billion Profit as Debate Over Royal Finances Intensifies
Teenager Charged With Murder in Wales Following Death of 14-Year-Old Boy
Nottingham University Hospitals Maternity Failures Trigger Calls for Public Inquiry Into Patient Safety
EasyJet Rejects £4.9 Billion Takeover Offer From Castlelake but Keeps Door Open for Further Talks
Record Heatwave Triggers UK Transport and Infrastructure Strain as Heathrow Revises Passenger Forecast Downward
Ofgem Approves Sixteen Long-Duration Energy Storage Projects to Strengthen UK Grid Stability
Labour Government Faces Internal Tensions Over Cabinet Decisions and Net Zero Policy Direction
British Food and Drink Exports Fall to Decade Low Amid Trade Friction and US Tariffs
Great Britain Grid Operator Spends £10 Million to Stabilize Electricity Supply During Heatwave Demand Surge
UK Parliament Committee Calls for Urgent National Adaptation Strategy as Extreme Heat Strains Public Infrastructure
Record-Breaking Heatwave Pushes England’s National Health Service to Critical Incident Status as Hospitals Struggle With Surge in Emergencies
UK Government Launches Review of Voluntary National Insurance Contributions System
UK Planning Inspectorate Reports Key Infrastructure and Planning Milestones in Annual Review
UK Government Reviews Travel Expense Reimbursement Rates for Employers and Employees
Civil Nuclear Constabulary Launches National Digital Memorial for Officers Killed in Service
UK and US Expand Collaboration on Nuclear Fusion Research and Workforce Exchange
Environment Agency Secures £275,000 Enforcement Deal with Anglian Water Over Permit Breaches
Independent Inspector Flags Ongoing Failures in UK Home Office Border Case Management
UK Government Considers Zero VAT Rate on Land for Social Housing Development
Bank of England Reports Sharp Drop in Emissions and Warns on Climate-Driven Financial Risk
Consumer Confidence in the UK Falls at Fastest Quarterly Rate Since 2022
UK Borrowing Costs Rise Sharply on Gilt Markets Amid Fiscal and Political Concerns
UK Government Plans Legislation to Bring British Steel into Public Ownership
UK Government Secures £210 Million Nuclear Fuel Deal to Support Ukraine Energy Security
London Ambulance Service Reports Record Emergency Call Volume Amid Severe Heatwave
United Kingdom Faces Record June Heatwave as Temperatures Hit 36.7°C in Somerset
UK Financial Services Reform Debate Intensifies Over Ministerial Regulatory Powers
UK Energy Price Cap Rise Expected to Keep Inflation Above Target Through 2026
UK Biohacking and AI Wellness Trends Drive Surge in Personal Health Monitoring
UK Social Care Sector Sees Workforce Shift as Overseas Recruitment Masks Domestic Labour Decline
Nuffield Trust Warns UK Health Budgets Remain Vulnerable Despite Record Spending Levels
UK Coal Pension Surplus Debate Returns to Parliament as Reform UK MP Seeks Clarity on Distribution
UK MPs Consider E-Petition Calling for NHS Newborn Screening for Spinal Muscular Atrophy
UK Parliament Debates E-Petition Calling for Inquiry Into Pro-Israel Influence in Politics
UK Economy Grew 0.6 Percent in Q1 2026 but Business Sentiment Weakens Over Geopolitical Risks
UK Financial Services Bill Enters Lords Committee Stage With Expanded Ministerial Powers
UK Armed Forces Bill Advances With Plans for Defence Housing Service and Drone Defence Measures
UK Treasury Proposes Higher Electricity Generator Levy and Updated Mileage Allowance Rules
UK Parliament Debates Health Bill Amid Persistent GP Access and Patient Satisfaction Concerns
UK Financial Sanctions Regulator Signals Faster, Intelligence-Led Enforcement Strategy
British Chambers of Commerce Warns Business Confidence Crisis Is Dampening UK Investment
UK Parliament Debates Carbon Budget Order as Pressure Mounts on Net Zero Delivery
UK Energy Price Volatility Reinforces Pressure for Faster Electrification of Economy
UK Defence and Aerospace Strategy Gains Momentum as Keir Starmer Pushes Industrial Cooperation in Berlin
×