The novel coronavirus has brought rapid and lasting economic change around the world. But in the UK, the level of impact depended on where you lived when the virus arrived.

Our research shows that the economic hardships we encountered during periods of social restrictions were particularly harsh on those living in disadvantaged neighborhoods.

During the first national lockdown, for example, we found that 23% of people in the UK’s most deprived areas were unable to afford daily expenses or save for the future. Food bank use has been reported at 9%. In the least disadvantaged places, these figures were 6% and 0.5%, respectively.

The impact on employment followed a similar pattern, with 10% of workers from the most deprived areas experiencing job losses in the pandemic’s early months, compared to just 4% in the least deprived areas. In general, people living in the UK’s most disadvantaged neighborhoods are falling further behind through the pandemic.

This is consistent with previous data showing how being poor limits a person’s ability to deal with – and recover from – sudden changes in economic conditions. Mostly, this stems from a lack of financial shock absorbency (having savings, for example) and from the nature of government welfare provision.

With COVID, sudden restrictions on the job market, combined with a lack of childcare, has put many in uncharted waters. Among them, single-parent families were more likely to lose jobs or have fewer working hours.

A report by the Independent Women’s Budget Group found that the social and economic impacts of COVID were particularly severe for women with disabilities, women from minority ethnic groups, and immigrant women. Once again, this underscores how the pandemic has exposed and amplified existing vulnerabilities.

In terms of emergency support, the temporary increase in universal credit (which provided an additional £20 a week to the standard allowance) helped reduce overall inequality. The leave system (as well as similar support for the self-employed) has reached many – but not all – who are facing potential difficulty.

Created to prevent potential mass unemployment and alternative wages to workers, these policies excluded many in precarious positions, including an estimated three million in zero-hour contracts, agency workers, and newly self-employed workers.

But those who qualified for labor support were not immune to difficulty. About a third of the 11.2 million furloughed workers saw their income fall below the official low wage threshold. Another 6% ended up defaulting on their bills as a result of significantly lower income, higher expenses, and lower savings.

Gaps in state support have been filled in by family, friends and community groups, many of which were set up as a direct response to the pandemic. Informal transfers of money from these sources were common for those on low incomes, no matter where they lived.

Persistent risk

This highlights the failure of state support to fully mitigate the effects of COVID restrictions for those facing financial, food and housing insecurity. Despite the government spending more than £70 billion on emergency financial aid, a combination of insufficient payments and access problems has left many dependent on informal forms of support. Additionally, there is evidence that the stigma surrounding benefits prevents many people from applying for help, even when they really need it.

Our analysis found that working-age adults were more likely to receive financial support from family or friends (8%) than to apply for universal credit (4%). We also found that this type of dependence was more likely among those who were furloughed than those who continued to work during the pandemic, and even more prevalent for those who lost their jobs, suggesting that the furlough scheme, while not ideal, was preferable to losing a job. group jobs.

Main street without shoppers.
Empty streets in April 2020.
Shutterstock/Kristen Greenwood

Today, while the worst effects of COVID seem to be past us, the risks of job losses, business failure and debt default remain. In the UK, a recession is expected, inflation is high, and energy bills are on the rise. Of particular concern are those whose financial vulnerability has been increased by the pandemic. They are not in a good position to emerge from the next crisis.

Read more: New data shows COVID will continue to have a negative financial impact on many families in the UK

Rather than reducing government financial support, the government needs to ensure that the poorest and most vulnerable are protected. In doing so, they will guard against the scarring effects of unemployment and debt.

There is also a role for targeted regional investment. The financial impact of the pandemic has been most acute for those in places with a long history of entrenched deprivation. Without help, the hardship and insecurity caused by the pandemic may turn out to be rooted, and with it, the geographic focus of poverty revealed by our analysis.

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