People from Black, Asian and other minority ethnic (BAME) communities are most at risk from debt as a result of the economic impact of the coronavirus pandemic, new analysis by Institute for Public Policy Research (IPPR) has found.
Among borrowers, those from Black communities had the highest relative debt levels, with an average equivalent to 18% of their annual gross income, compared with 12% across all groups.
One in eight BAME workers who were employed before pandemic are now out of work. They are twice as likely to have lost their jobs or otherwise stopped paid working during the crisis, according to IPPR.
Among people from all minority ethnic groups who were employed or self-employed at the start of 2020, 13% were no longer working in June, compared with 5% of the overall population.
They are also twice as likely to expect to struggle to pay their usual bills and expenses in the next three months.
People from minority ethnic communities put their chances of not being able to pay their bills over the three months from June at 27% to 34% on average, compared with 14% across the population, according to IPPR analysis of data from a regular survey of UK households and a special survey carried out soon after the first peak of the pandemic. The research is part of a wider project on the growth of indebtedness and problem debt across the UK.
BAME people are 50% more likely to be renters than the wider population — 44% compared with 28% — so will not have benefitted as much from emergency mortgage holidays and are more likely to risk eviction as a result of rent arrears, IPPR said.
People from black, Asian and other minority ethnic communities were more likely to face financial difficulties before the coronavirus pandemic hit — 12% to 18% reported struggling, compared to 7% across the population as a whole.
Shreya Nanda, IPPR economist and an author of the report, said: “Without further intervention we are on course for a new debt crisis, from which black, Asian and other minority ethnic people are particularly at risk.
“Many in these communities are likely to experience financial difficulty in the months ahead, and to be vulnerable to eviction as a result of rent arrears.
“Such economic insecurity risks compounding the already disproportionate health impacts borne by people with minority ethnic backgrounds during this crisis — effectively a ‘double whammy’.”
Anna Round, senior research fellow, co-author who is leading the research project, said: “It’s crucial to understand how vulnerable different groups are to the growing risk of debt as a result of the coronavirus crisis. What this tells us is that people from black, Asian and minority ethnic communities are most exposed to indebtedness, with all the problems that can bring on top of the greater health issues they already face.
“We are now undertaking further research that will enable policymakers to gauge what kind of interventions would best protect these groups, as well as others most vulnerable to the economic effects of the crisis.
“Action will be needed to prevent minority ethnic communities in particular from falling into a damaging spiral of financial insecurity and problem debt.”