More than 40 percent of Britons are struggling financially or suffering poor health, a sharp increase from last year driven by the COVID-19 pandemic, Britain’s Financial Conduct Authority said on Thursday.
The FCA said there are now 27.7 million adults in Britain affected by low financial resilience, poor health or other recent negative life events, up from 24 million in February 2020, a month before the country went into its first lockdown to fight the pandemic. Britain’s total population is 67 million.
Having just one of the characteristics puts a consumer at greater risk of harm, the FCA said in the latest findings of its regular Financial Lives survey.
The survey contacted 16,000 people between August 2019 and February 2020, with a follow up survey of 22,000 people in October last year.
Consumers with too much debt to manage or low levels of savings or erratic earnings rose from 10.7 million to 14.2 million during 2020, the FCA said.
Over 13 million people are expected to struggle to make ends meet, with many saying they are expected to take on more debt, cut back on essentials, or use a food bank, it said.
“The pain is not being shared equally with a higher than average proportion of younger and BAME adults becoming vulnerable since March," said Nisha Arora, the FCA’s director of consumer and retail policy.
“It is likely the picture will have got worse since we conducted the survey," she said.
To ease the financial pain of COVID-19, which caused the worst economic slump in 300 years, the government told banks to offer payment “holidays" lasting many months on mortgages, credit cards and other forms of credit. One in six mortgage borrowers or 3.2 million people took up a payment deferral.
The expiry of relief measures this year is likely to trigger more financial difficulties for people, with Bank of England Deputy Governor Sam Woods warning last week that the worst was yet to come for banks, which had provided the measures.
Finance minister Rishi Sunak is under pressure to do more to protect the economy and fund the fight against COVID-19 in his March 3 budget, having already increased spending and cut taxes by over 280 billion pounds ($385 billion).