A new report from the Resolution Foundation has found that the UK’s wealth gap has been growing over the last decade. They estimate that 1% of adults (around 488,000) own 14% of the UK’s assets, worth around £11 trillion whereas 15% of adults (around 7.3 million) are in debt and/or own no assets at all.
The Resolution Foundation point to the spreading of property wealth in the mid-1990’s and mid-2000’s which did so much to improve wealth inequality but has now seen all progress reversed over the last decade. The government however insists that income inequality in the UK is at its lowest level since the mid-1980’s.
As most of a person’s wealth is generally in their property, the fall in the proportion of property wealth owned by the bottom four-fifths of the population is a worrying trend. Policy analyst at the Resolution Foundation, Conor D’Arcy, spoke to the BBC regarding their reports findings; “Given the hugely unequal distribution of wealth across Britain, it’s time we looked into how the nation’s wealth is divided up and what the consequences are for those who never build up assets of any significance,”
“Falling levels of home ownership mean that, having once been a great force in driving down inequality, shifts in who owns what property are now fuelling the wealth gap between rich and poor, while also creating sharp wealth divides between young and old.”
As a result of these findings, there have been calls for the government to address this issue and reform the housing market. As the wealth gap widens, the debt bubble in the UK grows as the number of households that are rapidly accumulating unmanageable debt continues to grow at a worrying rate.
Unsecured credit, which includes credit cards, loans and overdrafts, is expected to hit levels last seen around the time of the 2008 financial crash. Inflation has recently reached a four-year high and as a result, many households are seeing their budgets squeezed with many relying on credit to meet their necessary expenses.
Debt advisers and debt charities have urged the government to fulfil their manifesto promise to introduce a scheme where those in serious debt are protected by law from further interest, charges and enforcement action for a period of at least six weeks.
Head of policy at Stepchange, Peter Tutton, spoke to The Guardian about the increasing levels of debt in the UK; “It really is one of the great problems of the time that politicians have to grapple with… We are seeing more and more households struggling just to make basic ends meet… We would like to see the government say, ‘we need to do something about this’.”
The longer that the level of debt in UK households continues to rise, the more likely it is for the wealth gap to widen even further. As many economists, debt advisers and debt charities, worry about this issue they will continue to call for more action and regulation to be put in place to protect consumers and try to stem the problem before it gets any worse.