Coronavirus: Poorer households funding lockdown with debt, says think tank
Lower-income households use more savings and loans while the coronavirus is blocked, while richer families save more because eating out and traveling abroad are prohibited.
This is the result of research by the Resolution Foundation, a think tank.
Lower income households were twice as likely to increase their debt during the crisis as richer households.
Workers in disused parts of the economy have average savings of £ 1,900.
This is comparable to the £ 4,700 buffer for someone who could work from home during the lockout.
"The UK pre-coronary virus has been characterized by increasing prosperity and harmful wealth differences between households," said George Bangham, an economist with the Resolution Foundation.
"These differences in wealth were uncovered by the crisis. While higher-income households have built up their savings, many lower-income households have used up their savings and have had to turn to high-interest loans."
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Wealth differentials across the country have also increased, with London and the South East accounting for 38% of total wealth between 2016 and 2018, up from 32% a decade ago.
Wealth inequality is still almost twice as high as income inequality.
Impact on young people
Last month, the think tank found that Covid-19 most likely caused young people to lose their jobs or their income to drop.
More than every third 18- to 24-year-old earns less than before the outbreak.
Younger workers risk losing their salaries for years, while older workers may involuntarily retire.
Last year, another think tank, the Institute for Fiscal Studies, found that widening inequalities in pay, health, and opportunities in the UK are undermining confidence in democracy.
It warned of out of control income for high earners, but rose among the poorest in "deaths of despair" such as addiction and suicide.
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