The wealth gap between poorer and richer families in the UK has been exacerbated by the Covid-19 pandemic, new figures from the Institute of Fiscal Studies (IFS) show.
While income from work has fallen for many, outgoings have also typically decreased due to what the IFS termed ‘forced savings’ – the inability to spend money on certain items under lockdown conditions.
Due to their higher incomes and higher spending habits, richer households have become richer during the pandemic.
The top fifth earners saved money at a faster rate than before lockdown after their outgoings reduced by 41%, or £195 per month, which has outweighed any loss in income.
But for poorer households, the opposite is true. Outgoings have fallen just 30% for the lowest fifth of earners, or £75 per month, and this has not been able to make up for what they have lost in wages.
The average household lost £170 per month between March and September.
Workers in the hospitality sector, who are significantly more likely to be low paid, have been hit especially hard by the impact of the lockdown restrictions, which has seen spending fall by 20% in pubs and 60% on holidays.
Mubin Haq, Chief Executive of Standard Life Foundation, which sponsored the report, said: “Increasingly the pandemic is exacerbating existing inequalities.
“The poorest were the least able to cut back on spending, as much of their expenditure is on daily essentials. Coupled with income falls, they saw their bank balances reduce by nearly £200 a month whilst those on higher incomes saw increases of nearly £400 a month.
“Finances for those on the lowest incomes are likely to deteriorate further especially if the government does not extend the £20 a week uplift to Universal Credit beyond March next year.”