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Overview

Households headed by someone from a minority ethnic group are among those that continue to be the hardest-hit the prolonged period of very high costs of living – the reasons for which are deep-rooted and complex. Prior to 2020, the socio-economic picture in the UK was one of entrenched and in many cases increasing inequality between ethnic groups, of complex intersectional disadvantage, and unequal exposure to risk – financial and otherwise. The COVID-19 pandemic worsened these inequalities: for example, people from minority ethnic groups were more likely to lose income and earnings as a result of the pandemic than those from a White ethnic background. The most recent review of UK poverty shows that, in 2024, people from Pakistani, Bangladeshi, Black African or ‘any other ethnicity’ households experience similar very deep poverty rates. There is also a well-evidenced overlap between poverty, ethnicity and mental health.

In addition to socio-economic inequalities, minority ethnic groups face barriers accessing financial services relating to everyday life (for example, our findings on car insurance). These barriers include discrimination by financial services firms along with a ‘one size fits all’ approach as well as a lack of transparency around decision making. As a result, people from minority ethnic groups “hold fewer financial products, despite experiencing more of the life events that might require them.”

This briefing sets out the findings from Wave 10 of the Financial Fairness Tracker, focusing specifically on the financial wellbeing of minority ethnic households. Broadly, it shows that minority ethnic households fare worse across a range of financial indicators, which impacts negatively on their wider health and wellbeing in worrying ways.

This new data serves to reinforce the need for comprehensive changes to bring about meaningful improvements in the financial wellbeing of minority ethnic households in the UK. The first King’s speech under the new Labour government included the announcement of a Race Equality Bill – that would “enshrine in law the full right to equal pay for Black, Asian, and other ethnic minority people, strengthen protections against dual discrimination and root out other racial inequalities”, requiring larger firms to report their ethnicity pay gap. The impact of such policies ‘on the ground’ remains to be seen and it is critical that policy tackles not just the symptoms of racial inequalities, but also its causes.

Key findings

  • White British householders are twice as likely to be ‘financially secure’ (30%) than those from black, mixed or other ethnic groups (15%) and those from Asian ethnic groups (16%). Correspondingly, those from Asian (44%) and Black, Mixed or Other (49%) ethnic groups are more likely to be ‘struggling’ financially or ‘in serious difficulties’ than White British householders (37%).

     

  • Minority ethnic groups (as a whole) tend to fare worse than the White British group across a range of indicators, including:
    • They are twice as likely to have faced debt collection activity in the past six months (24%, cf. 11%) (rising to 33% for those from Black, Mixed or Other ethnic groups)
    • They are significantly more likely to describe car insurance premiums as ‘unaffordable’ (36%, cf. 29%) or to have cancelled/not renewed insurance policies to save money (19%, cf. 12%)
    • A greater proportion of people from minority ethnic groups had turned to family and friends for financial help in the past six months (27%, cf. 17%), had borrowed money for daily living expenses (34%, cf. 25%) or had faced significant food insecurity (18%, cf. 11%) than the White British group
    • Two-in-five say that financial worries cause them to sleep poorly at night (43%, cf. 32%) and over half report that thinking about their financial situation makes them feel anxious (56%, cf. 44%).
    • Looking to the future, just 14% of minority ethnic householders feel ‘very confident’ about their financial outlook over the next three months (cf. 20% among White British householders)

       

  • Over fifties from minority ethnic groups are a particularly vulnerable group – especially women. Minority ethnic respondents aged 50+ are significantly less likely to be financially secure (26%, cf. 40%) and significantly more likely to be in serious financial difficulty (22%, cf. 12%) than those from White British backgrounds. Only one-in-five (20%) of older women from minority ethnic groups are ‘financially secure’ compared with a third (33%) of older men from minority ethnic groups.

About the research

abrdn Financial Fairness Trust has commissioned a periodic cross-sectional survey to track the financial situation of UK households since the start of the coronavirus pandemic in early 2020. The latest wave of this survey, wave 10 – conducted in May 2024 – gives insight into the nation’s finances during the ongoing cost of living crisis, just prior to the UK General Election. The findings are based on responses from nearly 6,000 households about their income, payment of bills, borrowing, savings and ability to pay for other essentials such as food. This report presents key results from the survey, broken-down by respondent ethnic group. The survey was run by Opinium, while the analysis was conducted independently by the Personal Finance Research Centre at the University of Bristol.