Politics

Poorer Brits turn to borrowing during pandemic while higher income households SAVE money


POORER Brits are being forced to borrow more money to make ends meet during the lockdown, but richer families are managing to save money.

Lower-income households are twice as likely as richer ones to have increased their debts during the crisis, according to think tank Resolution Foundation.

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Poorer Brits are being forced to borrow more money during lockdown

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Poorer Brits are being forced to borrow more money during lockdownCredit: Alamy

Workers from parts of the economy which has been forced to shut down because of coronavirus have an average saving pot of £1,900.

But Brits who have been working from home have around £4,700 put side for a rainy day.

Of some of the poorest households in Britain, one in four had increased their debt – most commonly with credit cards which have high interest rates – during the coronavirus crisis.

Only one in eight of high income households had increased their use of consumer credit and one in three have increased savings significantly as spending on eating out and holidays was cut.

Economist at the Resolution Foundation George Bangham said: “Pre-coronavirus Britain was marked by soaring wealth and damaging wealth gaps between households.

“These wealth divides have been exposed by the crisis. While higher-income households have built up their savings, many lower-income households have run theirs down and had to turn to high-interest credit.”

Wealth gaps across the country have deepened – London and the South East now accounted for 38 per cent of all wealth between to 2016 to 2018, up from 32 per cent a decade previously.

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In real terms, the gap between the richest and poorest tenth of households grew by more than £370,000 in the same time period to reach £1.4 million.

According to the think tank, wealth inequality – a household’s total assets – is twice as high as income inequality.

Young people have been disproportionally effected by the crisis, and their pay could be affected to for years to come.

More than one in three 18 to 24-year-olds is earning less than before the outbreak.

 

 

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