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Finance & Economics

Borrowing and lending dropped by 40% in UK amid lockdown

Aug 04, 2020

The pandemic has caused a shift in borrowing and lending

Borrowing and lending

Borrowing and lending dropped by 40% in UK amid lockdown. Source: pixabay.com

According to Lloyds Bank, borrowing significant sums of money from friends and family reduced by 40% throughout lockdown in the UK.

The report states that only 13% of people have borrowed money from close ones over the last 12 months, compared to 31% who had done so in March 2019.

Along with that, lending has also seen a significant decline. The loaning of money to loved ones dropped by 34% over the months of lockdown.

Only 19% have lent money to loved ones in the last year compared to 40% in March 2019.

In fact, 18-24 years olds are the most likely to lean on friends and family for financial help. Although, borrowing amongst this group has dropped from 51% to 30%.

Even given the difficulties, young people can face in achieving milestones, like buying their first car or house, there has been a concerted effort not to borrow from the Bank of Mum and Dad. We expect to see this change over the next 12 months, as people try to balance the financial fallout of COVID-19, with wanting to move forward with life plans after months of restrictions
Jo Harris, Managing Director, Lloyds Bank

Among those who have borrowed money recently, the main reason for doing so was debt consolidation. In fact, 16% of people citing this as the reason.

For 14% of the respondents, the purchase of the car is the second most popular, followed by home improvements accounting for 12%.

Family and friends who have been lending money are much less likely to be happy about doing so. Only 51% saying they were pleased to be able to help someone out, compared to 61% in 2019.

We’ve reported that 56% of the respondents are in debt due to the financial burden caused by the pandemic.

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