U.K. Low-Income Households Turn to Debt as Rich Save in Lockdown
(Bloomberg) -- Lower-income households in the U.K. are twice as likely to have turned to credit than their better-off counterparts during the coronavirus crisis, according to research from the Resolution Foundation.
Workers in shut-down sectors of the economy had an average of 1,900 pounds ($2,350) in savings, the think tank said in a report published Monday. That’s less than half of the 4,700 pounds average held by Britons able to work from home during the pandemic.
Poorer households were more likely to have eaten into their savings and increased their debt, most commonly with credit cards that carry high interest rates, it found.
The report is just the latest to highlight how the pandemic is exacerbating economic and social inequalities in Britain. Last week data showed poorer households have experienced the greatest hit to earnings and hours, while McKinsey research said those earning least are the most vulnerable losing their employment.
“Wealth divides have been exposed by the crisis,” said George Bangham, an economist at the Resolution Foundation. “The impact of coronavirus crisis will be with families for many years to come.”
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