LOWER-INCOME households are more likely to have increased their use of consumer credit and be saving less than usual during the coronavirus crisis, a new study suggests.

The Resolution Foundation said its research indicated those most at risk have the weakest savings to fall back on.

The report, published today in partnership with the Standard Life Foundation, said the crisis was exposing Britain’s wealth gaps and the ability of low-wealth households to weather the economic storm.

A typical worker in a shut-down sector of the economy had average savings of just £1,900, far less than the average savings (£4,700) of someone who has been able to work from home during the crisis, said the think tank.

Lower-income households are far more likely to run down their savings and turn to high-interest credit, it was found.

Poorer households are saving less than usual and have increased their use of consumer credit, usually credit cards which carry high interest rates, said the foundation.

In contrast, just one in eight high-income households have increased their use of consumer credit while one in three are seeing their savings increase significantly as their spending falls.

George Bangham of the Resolution Foundation said: “Pre-coronavirus Britain was marked by soaring wealth and damaging wealth gaps between households.

“These wealth divides have been exposed by the crisis. While higher-income households have built up their savings, many lower-income households have run theirs down and had to turn to high-interest credit.

“The impact of the coronavirus crisis will be with families for many years to come. 

“That's why it’s important for the government to both strengthen the social security safety net via universal credit and assist more low and middle-income households in building up their private safety nets by boosting their savings.”