Many of us will have an opportunity during lockdown to get rid of some of our debt. Perhaps we have a mortgage or personal loan that we can reduce a bit more quickly because we are not going out and therefore haven’t been spending as much as we normally do.
The people able to do this are the ones who are still working, probably from home. They are really busy day to day, and have not noticed any change in their regular income so they are able to save money and get rid of debt.
Unfortunately for every person who finds themselves saving money or paying off debt there will be someone else who is getting into more debt, or at least struggling to make ends meet on a daily, weekly, or monthly basis.
There is no doubt in my mind that the effect of the coronavirus crisis will increase inequality in this country. There are literally millions of workers who have lost their jobs since March, or who are living on lower incomes because they have been furloughed by their employer, or who are self-employed and have fallen through the Government support cracks. Many of these people will be struggling to make ends meet on a regular basis since they are trying to survive on lower incomes, or no income at all.
And the unfortunate truth is that it is those from already low-income households who are likely to be suffering most, and who are likely to be using their savings, if they had any in the first place, and turning to high interest credit when their savings run out.
This is likely to get worse as the government reduces help to employers under the Job Retention Scheme, and as job losses and unemployment creep up as a result of this.
The Government has made a lot of the fact that they are doing all that they can to help people affected by the coronavirus crisis. But the bottom line is that the help they have given has been aimed at businesses, not individuals, and far too many people, more than three million according to some estimates, are receiving no help at all.
It’s vital that the Government gets a handle on this quickly and ensures that support is available to those who need it most as restrictions are eased.