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COVID-19: More than a quarter of adults struggling financially as pandemic bites

Written by on 12 February 2021

More than a quarter of UK adults have been struggling financially in the wake of the coronavirus pandemic, according to a survey by the City watchdog.

The Financial Conduct Authority (FCA) estimated that the number of people with “low financial resilience” rose from 10.7 million to 14.2 million over the course of 2020.

An overall, wider measure of vulnerability has also grown – with younger and BAME (Black, Asian and minority ethnic) adults more likely to have suffered, the survey found.

The poll in October showed 27.7 million adults in the UK were affected by poor health, recent “negative life events” or financial struggles, up from 24 million in February.

More than 22,000 people responded to the Financial Lives survey, which focused on the impact of the pandemic on consumers.

The survey classified people with low financial resilience as those who had heavy debts, low levels of savings, or erratic earnings.

It showed that 30% of adults expected their household income to fall during the next six months while 25% expected to struggle to make ends meet.

The poll found 33% of adults reported they were likely to cut back on essentials and 11% saying they were likely to use a food bank, with 16% expecting to take on more debt.

Yet it also showed that, financially, 48% had not been affected while 14% had actually seen an improvement.

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COVID-19: The economic virus

Nisha Arora, director of consumer and retail policy at the FCA, said: “Many of the findings are worrying.

“Since the start of the pandemic, the number of people experiencing low financial resilience or negative life events has grown.

“The pain is not being shared equally with a higher than average proportion of younger and BAME adults becoming vulnerable since March.

“It is likely the picture will have got worse since we conducted the survey.”

The findings come a day before annual GDP figures for 2020 were expected to show an economic collapse on a scale not seen for decades.

Business activity across the UK has been crushed by the impact of the pandemic with sectors such as retail, hospitality and aviation particularly affected.

Redundancies have been running at record levels and the Bank of England governor Andrew Bailey has estimated that unemployment had climbed to 6.5%, or 2.2 million, by the start of this year.

GDP looks set to shrink further in the current quarter as lockdowns bite, but the Bank foresees a rapid recovery over coming months as vaccines are rolled out.

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