New research from charity the Money Advice Trust estimates that as many as 10.2 million UK adults are worried that their finances will never recover from the impact of Covid-19.
The research is based on insight from the charity’s National Debtline and Business Debtline services, and on the results of a survey of 2,000 people carried out by YouGov.
One in five (20%) are fearful of the prospect of their financial situation never recovering to pre-Covid levels, and this equates to 10.2 million people when extrapolated across the entire UK adult population.
Around one in eight (12%) say they have been forced to use credit to pay for essential costs such as groceries, utility bills, and council tax, and this is equivalent to approximately 6.2 million people. Of those who have used credit in this way, 37% (or 2.3 million) say that they have used high-cost credit to meet their essential bills. One in nine (11%), equivalent to approximately 5.5 million people, say they are at present behind on payments on essential bills. Council tax is the most common essential bill for people to be behind with.
As many as 27% of UK adults report being better off financially as a result of the pandemic, but a greater number (31%) say they have been left in a worse position.
Amongst the self-employed, 37% estimate that it will be a year or more before their business revenue recovers to pre-Covid levels. 9% of the self-employed don’t think that their income will ever get back to where it was.
Joanna Elson CBE, 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.”