You are here: Home - Household Bills - News -

Brits worry finances won’t recover from Covid

0
Written by: Emma Lunn
29/03/2021
One in five adults (an estimated 10.2 million people) worry that their finances will not recover from the pandemic, according to The Money Advice Trust.

The research found that one in eight adults (12%) have had to use credit to pay for essential household bills or goods, including groceries, energy bills and council tax, since the coronavirus pandemic began.

While a quarter of people (27%) say they are better off financially as a result of Covid-19, almost a third (31%) say they are worse off.

In the charity’s new report, The cost of Covid, the Money Advice Trust outlines the experiences of people whose finances have been hit hardest by the pandemic.

While the financial situation of many would have been far worse were it not for the support put in place by government, regulators and creditors, the charity is calling for coordinated action to provide safe routes out of debt in the wake of Covid-19.

Relying on credit to plug gaps

While some people have seen their finances and ability to save improve over the past year, for others the burden of debt continues to increase as they struggle to make ends meet.

One in nine (11%) adults say they are behind on one or more essential household bill or personal credit commitment as a result of the pandemic.

Many are relying on credit to plug gaps in their finances, with one in eight (12%) saying they had to use credit to pay for essential household bills or goods, with groceries, utility bills, and council tax the most common.

Income shocks driving debt problems

One of the key factors affecting many people struggling as a result of the pandemic has been income uncertainty. Job loss and income shocks have been common reasons for financial difficulty cited by people contacting National Debtline.

The proportion of unemployed callers to National Debtline rose from 34% last March to 42% by December – while the proportion of callers in full-time employment fell from 39% to 32%.

A long road to recovery

With one in five adults worried their finances will never fully recover from the outbreak, the charity fears it could be a long road to recovery for many, including self-employed people and small business owners.

Earlier findings from the charity show that nearly four in 10 self-employed people (37%) expect it to be more than a year before their business income returns to pre-Covid levels – while 9% do not expect this at all.

The Money Advice Trust is calling for coordinated action by government, regulators and industry to help people get out of debt safely and back onto a stable financial footing.

It’s urging the government to consider a fairer and more affordable approach to collecting debts owed to central and local government. It’s also asking for specific help for renters who have fallen into debt as a result of the pandemic, in the form of no-interest loans and grants to clear rent arrears.

The Money Advice Trust is also calling for more support and grants for self-employed workers who remain excluded from the government’s support measures.

Joanna Elson, chief executive of the Money Advice Trust, said: “A year on from when the Covid-19 outbreak began, the finances of millions of households have been turned upside down, with the effects not felt equally. While some people have found themselves able to save more, others have fallen into financial difficulty – with many struggling to cover food and energy costs.

“It is clear that this is not just a health crisis but a financial one, too. Our findings suggest more than 10 million people are worried their finances will not recover, with more than 5 million already behind on bills – and this is only likely to increase. Without coordinated action now to help people get back on a stable financial footing, there is a danger of problem debt becoming one the pandemic’s many lasting legacies.

“Support measures put in place by government, regulators and creditors have undoubtedly helped ease the financial pressures on many households, however, without a clear roadmap out of debt, for millions of people these challenges are set to continue long after lockdown measures ease.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

It’s time to get your finances in shape for summer, and moving your cash savings to a higher paying deal is ...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The experts’ guide to sorting out your personal finances in 2021

From opting to ‘low spend’ months to imposing your own ‘cooling-off period’, industry experts reveal t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Deliveroo lowers IPO valuation by £1bn

The takeaway food delivery firm will price its initial public offering (IPO) towards the bottom of its intended price range,...

Close