News / Economy

UK rich-poor divide further agape: Report

Tuesday, 10 March 2015 6:24 AM [ Last Update: Tuesday, 10 March 2015 6:43 AM ]

A report says UK’s wealth gap has dramatically widened, as the rich are 64% richer and the poor 57% poorer. (File photo)

Britain’s wealth gap has dramatically widened in the past decade, with the rich becoming 64 percent more well-off and the poor getting 57 percent poorer, a think tank reveals.

The Social Market Foundation released on Tuesday a report which analyzed the changing earnings and saving of thousands of Britons between 2005 and 2012-13.

The think tank said the wealth among the top 20 percent grew as they were able to set aside more money as a buffer, with average savings and investments of around £10,000 in 2012-13, compared with £6,000 prior to the recession several years ago.

This is while the poorest 20 percent have seen their net wealth fall by 57 percent from £120 per person in 2005 to zero in 2012-13. The findings also showed that the poorest owe 45 percent more money than what they did seven years ago.

The think tank called for more support to those with lower incomes and those who are within the younger age groups to help them save more. However, it also admitted that the task is a challenging one, “especially for those with little income to spare once necessities have been paid for.”

The foundation also said that the declining financial help for those on low incomes and younger workers limited the British economy’s ability to rely for financial growth on consumer spending among all income groups. It warned that these two groups are ill-prepared for any future financial changes or interest rates.

Meanwhile, analysts believe that Britain will see the wage gap grow even more in the next 15 years.

A separate study released by the think tank Fabian Society on February 25 stated that the earning of high-income households in the UK will rise 11 times faster than for low-income families by 2030. This is while the real disposable income of British middle-income households will rise by nine percent. For low-income groups, the rise will be a mere two percent.

The current UK Tory-led coalition government launched austerity measures when it came to power in 2010 in a bid to tackle the country’s mounting debt and sluggish growth. The cuts have severely hit the poorest households in the country, forcing many of them to choose between paying for food or energy.

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