(Sharecast News) – Around nine million Britons were forced to borrow more money as of December of 2020 due to the hit to their personal finances from the pandemic, a study by the Office of National Statistics showed.
At the end of June 2020, 10.8% of adults reported borrowing money, rising to 17.4% in December 2020. The proportion borrowing £1,000 or more also increased, from 35% to 45% since June 2020.
The study, which covers the period from March to December 2020, looked into which groups of the British population had been more affected by the impact of the coronavirus crisis.
The labour market shocks associated with the coronavirus pandemic have been felt more by young people and the lowest paid, found the ONS.
People aged under 30 years and those with household incomes under £10,000 were around 35% and 60%, respectively, more likely to be furloughed than the general population.
Between 11 and 15 November 2020, when restrictions were tightened in some areas of the country, 17% of people with a household income less than £10,000 reported that they had been furloughed. In comparison, only 2.7% of people with a household income of more than £40,000 reported this.
Also, higher incomes have been usually associated with the option of working from home with 55.1% of people with income over £20,000 able to stay in their home compared with 19.1% of people with income less than £20,000.
Of those without work during those trying months (either because of being on furlough or other reasons), 52% in the top income quintile were paid in full. Only 28% of those in the lowest income quintile were paid their full wages during that period.
Self-employed people were more likely to report reduced working hours and reduced income, even if they had received support from the Self-Employment Income Support Scheme (SEISS). They were also more likely to borrow over £1,000 than employees in early December 2020 (60.9% versus 49.4% of those who borrowed)
Impacts to household spending have been felt differently across groups, with parents less able to afford either a holiday or an unexpected but necessary expense, they were also roughly 50% more likely to have difficulty meeting their usual expenses.
According to AJ Bell financial analyst, Laith Khalaf: “It’s clear that the young, the self-employed, and those on lower incomes have borne the brunt of the financial damage inflicted by the pandemic. But more affluent households with steady, undisturbed income streams have found themselves awash with cash, as spending options have been severely curtailed by ongoing lockdowns.
“It’s particularly telling that those on higher incomes who were furloughed were much more likely to be paid in full than those at the bottom end of the spectrum. Again, this paints of a picture of financial pressure falling on those least able to afford it.
“At the end of the pandemic then, we will be left with a wider divide between the have and have-nots.”
