Nine million people had to borrow £1,000 or more in 2020 due to COVID
Almost nine million had to borrow money last year because of the pandemic, according to new government figures.
By December 2020, the number of people borrowing £1,000 or more had risen to 45% – up by 10% in just six months.
The Office for National Statistics reported that parents were particularly affected, as they were less able to afford either a holiday or an unexpected but necessary expense than non-parents.
Parents were also 50% more likely to have difficulty meeting their day-to-day expenses and were 50% more likely to see their incomes fall than the general workforce – unsurprisingly, the gap narrowed once schools started to reopen as the year progressed.
At the end of June 2020, 10.8% of adults reported borrowing money, rising to 17.4% in December 2020. Of those, the proportion borrowing more than £1,000 increased from 34.7% to 45.1% in the same period.
There was a sharp rise in the proportion of disabled people needing to borrow more than £1,000 – going up from up an eighth (12.8%) of those who borrowed in June to more than a third (36.2%) in December 2020.
Meanwhile, self-employed workers were just over 10% more likely to borrow more than £1,000 than employees at that time.
People found it hard to save
As the year progressed, an increasing proportion of people said they could not save for the year ahead. At the end of March 2020, 31.6% reported they would be unable to save rising to 38.4% in mid-December 2020.
Groups finding it hardest to save were workers earning less than £20,000, self-employed workers and people renting their homes.
In contrast, the under-30s reported being more likely to be able to save than other age groups.
More furlough for low-income workers
Young people and lowest paid workers were more likely to be furloughed.
People who were under 30 and those with household incomes of less than £10,000 were 35% and 60%, respectively, more likely to be furloughed than the general population.
Self-employed workers were also more likely to report reduced hours and income. In December 2020, the self-employed were around 5.5 times more likely to report reduced hours than employees – up from the first lockdown when they were between two and four times more likely to say their hours had been cut.
On a positive note, people reported being less anxious in early October 2020 than they had been at the end of March, with anxiety levels 30.5% lower. They also reported being happier – up by 8.9% over the same period.
Could you start to pay off debts now?
Below are five ways to do this:
Create a budget and track your spending.
Pay off the most expensive debt first.
Pay more than the minimum balance each month.
Transfer debt to 0% balance transfer credit cards.
Stop impulse buys – ask yourself: do I need to buy it, and can I afford it?
If you're struggling to pay off debt or keep up with your priority bills, find out about if you can get a payment holiday to help or visit StepChange for free, confidential advice.
Disclaimer: All information and links are correct at the time of publishing.