In research published this Thursday, the Post Office said saving was still being driven by the wealthiest people while lower earners were suffering a debt crisis. According to the Centre for Economics and Business Research, which undertook the analysis, this trend has been happening for the past 12 years.
The poorest 40% of the population have spent more than they have earned over this period, in contrast to the top 40% of earners who had money to save every year.
Even during the financial crisis of 2007-2008 those in the highest income brackets had enough disposable income to increase the amount they saved annually. By contrast, the rise of payday lenders in Britain's "Wonga economy" symbolised the squeeze on living standards faced by ordinary families, the report says.
Henk Van Hulle, head of savings and investments at the Post Office, said: "These figures are incredibly worrying. While the UK's highest earners continue to account for the majority of savings, the poorest in our society are actually spending more than they earn."
Despite the economy's "green shoots" the poorest 20% would continue to spend more than they earned, though the researchers forecast that the figure would fall to £1,053 by 2018, based on average incomes and spending patterns.
Van Hulle said: "Even with indicators of improvement we are still in the middle of a significant crisis for the UK's poorest people who are sinking further into debt and unable to save."
More than a fifth of savers are set to save a lower portion of their income this year compared with last, according to the research based on the household incomes of 2,001 adults. This is most likely to occur in the north-west where almost a third expect to save a smaller amount this year. Londoners are bucking the trend, hoping to set aside a larger sum.
The research suggests the gulf between the wealthiest and poorest will continue to grow. This May figures from the Office for National Statistics showed Britain's richest 1% had accumulated as much wealth as the poorest 55% of the population.
The ONS said that household wealth in the south-east had been rising five times as fast as across Britain as a whole.
The average wealth of households in the south-east had surged to £309,000 at the end of 2012, up 30% since the first wealth report published by the ONS covering 2006-8. The average rise in England was only 6%.
By contrast, wealth in the north-east had fallen to an average of just under £143,000; in Scotland the figure was £165,500.
Emran Mian, director of the Social Market Foundation thinktank, said: "This is further evidence of a growing savings inequality between high and low earners with wealth becoming concentrated among those who have higher incomes. I can't see there was anything new in the chancellor's so-called budget for savers that is going to change things."
According to a report by the housing charity Shelter last month about 3.8m households did not have any reserves to pay housing costs. Shelter's findings were based on a YouGov survey of 7,500 adults who had rent or mortgage payments.
Shelter found that 44% of working families with children under 18 could be one month's salary away from losing their homes if they became unemployed because they had little or no savings.
Meanwhile Citizens Advice said it had noted a 16% rise in social housing rent arrears last year, and a big jump in repossession warnings.
Original Article
Source: theguardian.com/
Author: Harriet Meyer
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