Over half of all British adults got into debt in 2020, study shows

Norwich, London and Manchester were the three cities that were most affected financially during the pandemic, writes Isobel Frodsham

Millions of Britons were put on furlough this year, causing them to fall behind on their bills (Getty Images/iStockphoto)

More than half of Britons got into debt this year – with a quarter saying the pandemic was the reason their finances are now in the red.

New research revealed that 51 per cent of adults in the UK got into debt in 2020 and 25.5 per cent of the debt was directly caused by the pandemic.

While 2020 saw Britain enter into a recession, it also saw millions of people placed on furlough – a scheme where people were put on paid leave and received 80 per cent of their salary instead of the full amount – and dozens of high-street stores closing their doors for good.

The amount of debt owed in the UK in 2020 is £9,246 per person, and research by consumer website Money.co.uk showed that more than one in 10 people said their new debt was caused by reduced income due to being put on furlough.

They found Norwich, in Norfolk, is the city most affected by the furlough scheme in terms of its debt, with 20 per cent of all debt accrued in the city being blamed on furloughing workers.

It was followed by London, with 15.38 per cent of its debt being blamed on the effects of furlough, closely followed by Manchester, where 14.15 per cent of its debt is apparently due to furlough.

The furlough scheme was extended until March 2021 by Chancellor Rishi Sunak after England faced a second nationwide lockdown in 2020 throughout the month of November.

While England has now entered a tier system, at least 99 per cent of the country is in tiers 2 or 3, the toughest tiers, making it difficult for some businesses to stay open.

One retail worker, Steven James, from the West Midlands, was recently made redundant from his retail job due to the pandemic.

His debts ended up spiralling out of control, which led him to call the Christians Against Poverty (CAP) charity for advice and guidance about his debts.

He said: “When the pandemic came along, we were all furlough to start off with, which made me go down to my basic hours and put a financial strain on me.

“At a later date, the company went into financial difficulty and I was made redundant. That’s when the bills started to mount and things started to spiral out of control.”

Mr James said he tried to speak to the creditors and see if an agreement could be resolved but he realised it was impossible to do it on his own.

“I felt unuseful, like a failure as I was unable to financially support myself. It was a really dark time,” he added. “Now CAP are  involved I can concentrate on rebuilding my life and getting a new job."

According to statistics from HMRC, of the 4.3 million people that were put on furlough in March as part of the Coronavirus Job Retention Scheme, 3.9 million people were still on the same payroll by August.