People from black, Asian and other minority ethnic communities are at much higher risk of financial problems and rising debt caused by the Covid-19 economic crisis than the wider population, according to a respected thinktank.
The Institute for Public Policy Research (IPPR) said people from a BAME background were twice as likely to expect to have difficulty paying their usual bills and expenses in the next three months, and more than twice as likely to have lost their jobs or otherwise stopped paid working during the crisis.
They are also 50% more likely to be renters than the wider population, so will have gained less from emergency mortgage holidays and are at greater risk of eviction as a result of rent arrears.
Researchers said BAME people could suffer a “double whammy” of significantly higher financial impact on top of the disproportionate health effect of the virus itself on the same communities.
Official figures released on Sunday showed that a third of coronavirus patients in intensive care were from black, Asian and minority ethnic backgrounds.
The IPPR’s research is part of a wider project on the growth of indebtedness and problem debt across the UK.
Drawing on data from a regular survey of UK households taken before the pandemic and a survey carried out soon after the first peak of the pandemic, the IPPR analysis found:
People from black, Asian and other minority ethnic communities were more likely to face financial difficulties before the crisis – 12 to 18% reported struggling, compared with 7% across the population as a whole.
Borrowers from black communities also had particularly high relative debt levels compared with their income, at an average equivalent to 18% of their annual gross income, compared with 12% across all groups, the research found.
Thirteen per cent of people from all minority ethnic groups who were employed or self-employed at the start of the year were no longer working in June, compared with 5% of the group generally, the IPPR said.
People from minority ethnic communities are also more likely to be renters who will not have had the benefit of mortgage payment holidays.
Shreya Nanda, an IPPR economist and an author of the report into the research, 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, who is also working on the project and is a co-author, said: “It’s crucial to understand how vulnerable different groups are to the growing risk of debt as a result of the coronavirus crisis.
“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.”
The IPPR analysed data from the Understanding Society survey of UK households for the research.
Data for the pre-Covid period was taken from the period January 2016 to June 2019 and compared with figures taken from a special survey undertaken during May and June 2020, at the height of the first phase of the pandemic.
The proportion of people in intensive care in England, Wales and Northern Ireland who are not classified as white is 33.9%, very close to the 35% figure in April when the disparity was first identified, Intensive Care National Audit and Research Centre statistics show.
According to the last census, 14% of the population of England and Wales are BAME, meaning they are significantly over-represented among the sickest coronavirus patients.