Britain’s divided decade: the rich are 64% richer than before the recession, while the poor are 57% poorer
The gap between richest and poorest has dramatically widened in the past decade as wealthy households paid off their debts and piled up savings following the financial crisis, a report warns today.
By contrast, the worst-off families are far less financially secure than before the recession triggered by the near- collapse of several major banks. They have an average of less than a week’s pay set aside and are more often in the red.
Younger workers have fallen behind older people while homeowners – particularly those who have paid off their mortgages – have become increasingly affluent compared with their neighbours who are paying rent.
Evidence of Britain’s rapidly growing wealth gap was revealed by the Social Market Foundation (SMF), which analysed the changing incomes and savings of thousands of people. Its findings will be seized on by Labour as evidence that any recovery from the downturn is uneven and not shared across all income groups. However, the trends uncovered by the SMF began before the Coalition came to power, underlining the huge impact of the credit crunch on levels of affluence.
It found that the average wealth of the best-off one-fifth of families rose by 64 per cent between 2005 and 2012-13 as they put more money aside as a buffer against future shocks. They have average savings and investments of around £10,000 compared with £6,000 seven years earlier.
The proportion of people in this group with debts (apart from mortgages) dropped from 43 per cent to less than one-third. However, the SMF found the poorest 20 per cent are less financially secure than they were in 2005, with their net wealth falling by 57 per cent and levels of debt and use of overdrafts increasing.
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