The COVID-19 pandemic not only affected the health of millions of people across the country, but the accompanying disruption to economic life had impacts on the financial wellbeing of many households. This has been compounded by an ensuing cost of living crisis, with energy bills and food prices rising rapidly.
Studies suggest that the COVID-19 pandemic could potentially cause unprecedented economic costs to the UK economy.1 On an individual level, this meant financial stress or even economic crisis to many families. While significant interventions - such as the Coronavirus Job Retention Scheme (furlough), the uplift to Universal Credit, and the Coronavirus Business Interruption Loan Scheme - were quickly introduced to cushion the blow, lockdowns and other public health measures during the COVID-19 pandemic were harmful to employment and economic participation.2 The pandemic caused unemployment for some families3 as well as reduction in family income to others who were furloughed. One in four employees were furloughed4 at some point between March 2020 and June 2021.5 Furthermore, as pandemic restrictions eased, economic challenges have continued as a result of the ‘cost of living crisis’, partially due to inflation resulting from post-pandemic bottlenecks in global supply chains, now having significant impacts on household finances and economic security, as well as inequality.6
An emerging body of evidence shows that such financial impacts have been socially stratified, with already disadvantaged households experiencing greater negative financial impacts. While some households experienced unemployment or reduced income, other families, working in jobs that were easy to shift online, suffered less disruption and benefitted from increased household savings due to a reduction in expenditure during this period.7 This has led to concerns of potentially widening socio-economic inequalities.8 The school closures during the COVID-19 pandemic also had financial implications for families, especially those with low-incomes.9 A study analysing cross-sectional data from a nationally representative household survey in the UK found that disadvantaged households, such as single-parent households and households with at least one individual working part-time, might have been at greater risk of COVID-19-induced financial vulnerabilities, such as falling behind on paying bills and having low income.10
