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In the News

Household debt: Workers borrowed more in 2020 to prop up incomes

Ollie Gardner

21st January 2021

An ONS study suggests that nine million UK workers had to borrow money to help them cope with lower incomes last year as a result of being furloughed or a reduction in hours.

Low paid workers, as well as the young and parents with dependent children, have disproportionately suffered from falling incomes, requiring them to borrow more to stay afloat. In contrast, higher paid workers were more likely to remain on full pay throughout 2020, leading to a widening gap between household finances.

Think about how this will affect consumption, as those on lower incomes tend to have a higher marginal propensity to consume, as well as what this will mean for the level of inequality in the UK - and therefore the country's Gini coefficient.

Ollie Gardner

Ollie is a new economics teacher at an academically selective school having previously worked in the healthcare technology industry.

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