A Quarter Of All 2020 Personal Debt Caused By Covid-19

One in four UK adults said they got into debt because of the pandemic
Almost £10 billion of personal debt directly caused by workers struggling with reduced income due to furlough
£1,050 is average debt accrued due to loss of salary by furloughed employees
Over a third (36%) of the debt accrued this year in London has been blamed on the COVID-19 pandemic
25-34 are the age group that took on the most debt into 2021
Coronavirus Debt Index uncovers the impact of coronavirus on personal finances across the UK

Over half of UK adults got into debt this year, with one in four revealing that their debt was a direct result of the COVID-19 pandemic, according to new research.

The study by personal finance experts at money.co.uk reveals that 51% of UK adults got into debt in 2020 and half of that was new debt directly caused by the pandemic.

The average amount of debt owed in the UK in 2020 is £9,246 per person. But, crucially, more than one in 10 people said their new debt was caused by reduced income due to being put on furlough, according to the new money.co.uk Coronavirus Debt Index.

And that has meant one in every five UK adults have had to take out additional debt management products to pay off the debt caused by the pandemic.

Salman Haqqi, personal finance expert at money.co.uk, said: “2020 has been a year like no other. And this has had a huge effect on the finances of everyday people, including debt and how they’ve managed it.

“Our survey has shown that over 11% of new debt in 2020 is down to workers being furloughed and having reduced incomes. Based on the fact that 9.4m UK jobs were furloughed throughout 20201, the cost of debt due to furlough is roughly £1,050 per furloughed employee – that’s £9.87billion of furlough debt incurred in the UK during 2020.”

The story for workers who have been furloughed has been most bleak in the East of England, where 16.13% of all new debt is down to people having a reduced salary because of furlough, according to the data.

Elsewhere across the UK, the picture is similar. In Greater London 16.11% of all 2020 debt can be attributed to furlough, the money.co.uk study shows. In the North West 12.7% of all 2020 debt can be attributed to workers being furloughed and in South East 11.98% of all debt accrued this year is down to loss of salary for those who have been furloughed.

Norwich is the city most affected by the furlough scheme in terms of its debt. Some 20% of all debt accrued in the city has been blamed on workers being furloughed, according to the money.co.uk research. London is next, with 15.38% of its debt being blamed on the effects of furlough, closely followed by Manchester, where 14.15% of its 2020 debt has been caused by workers on furlough receiving a reduced salary.

UK residents aged 25-34 are the age group taking on the most debt into 2021 – an average of £12,819. And 36% of people age 16-24 have said they are taking debt into 2021 due to the COVID-19 pandemic.

The COVID-19 pandemic in general has wreaked havoc with the nation’s finances. More than a third (36%) of the debt accrued this year in London has been blamed on the COVID-19 pandemic.

In Northern Ireland, 32% of 2020 debt has been caused by COVID-19, according to the data. The West Midlands has seen 29% of debt caused by COVID and, in the East Midlands, the South West and Wales, 26% of all this year’s new debt has been blamed on the pandemic.

REGIONAL COVID STATS

What percentage of new debt has been incurred this year due to the impact of COVID-19:

REGIONS

Greater London	36.21%
Northern Ireland	32.00%
West Midlands	29.17%
East Midlands	26.32%
South East	26.32%
Wales	26.23%
East of England	23.86%
South West	21.98%
Yorks & Humber	20.83%
North East	19.57%
North West	18.55%
Scotland	13.98%

CITIES

Cardiff	35.42%
Brighton	35.29%
London	31.61%
Belfast	30.77%
Birmingham	27.36%
Norwich	25.58%
Nottingham	25.49%
Liverpool	23.68%
Sheffield	23.68%
Plymouth	21.88%
Manchester	19.23%
Bristol	19.05%
Leeds	18.18%
Glasgow	15.69%
Edinburgh	15.56%
Southampton	15.00%
Newcastle	14.58%

2020 DEBT DIRECTLY DUE TO FURLOUGH (REGIONAL AND CITY STATISTICS)

REGIONS

East of England	16.13%
Greater London	16.11%
North West	12.70%
South East	11.98%
Scotland	11.34%
West Midlands	10.89%
Wales	10.77%
East Midlands	9.88%
South West	9.47%
Northern Ireland	7.41%
North East	4.08%
Yorks & Humber	4.04%

CITIES

Norwich	20.00%
Glasgow	16.98%
London	15.38%
Manchester	14.15%
Plymouth	12.12%
Cardiff	11.76%
Nottingham	10.53%
Birmingham	9.01%
Brighton	7.69%
Liverpool	7.69%
Leeds	7.35%
Belfast	7.14%
Southampton	6.98%
Edinburgh	6.38%
Sheffield	2.56%
Newcastle	1.96%