Why the UK Leads the Way on Inequality
By Alice Martin / neweconomics.org

The UK is leading one global race: it is the only G7 country in which wealth inequality has increased steadily since 2000.

Seemingly unaffected by the financial crisis or subsequent recession, our recent report finds two trends posing a particular danger to the UK economy.

Household debt

After a period of retrenchment UK household borrowing is once more on the rise. Unsecured lending – such as credit card debt and payday loans – is now increasing at a rate of close to £1 billion a month. With real incomes falling for most, it is consumer debt that is helping sustain the UK’s economic recovery.

Secured lending is also on the rise. Although the record pre-crash levels of mortgage equity withdrawal – borrowing against the value of your home – have not returned, government-subsidy schemes such as Funding for Lending and Help to Buy are driving more and more people onto the property ladder, despite stagnating wages.

A steady increase in the size of new mortgages compared with borrower incomes suggests households are becoming more vulnerable to income and interest rate shocks. The Bank of England and the International Monetary Fund (IMF) have both warned that inflated property prices and related household indebtedness pose a real threat to UK financial stability.

While rising private debt has so far had only superficial impact on economic growth in the UK, its effects in compounding inequality are real. The financialisation of households through debt – as a compensation for a lack of pay growth – further burdens those at the poorest end of the income scale, while profits flow up to wealth owners.

Asset price rises

Because the value of property has a strong effect on consumer spending through rising wealth and confidence, much government activity since the crash has been focused on reflating prices. They have done this by subsidising mortgage credit through schemes such as Help to Buy. However, the UK’s housing shortage and its low rate of investment in housebuilding has seen this result in rapidly rising prices.

While the financial crash caused an immediate drop in property prices, the bubble did not fully burst and they soon began to rise once more. Two major mortgage lenders recently calculated prices were last year rising at the fastest rate since the crisis.

Since the crash the shape of the UK housing market has seen London and the South East soar ahead of other regions. The total value of housing stock in these regions has risen by £435 billion over the past five years, with a net loss of £206 billion across everywhere else.

Even in areas where property prices are rising it is not the mortgage-laden households that are the prime beneficiaries. Unaffordable housing has led to the rise of ‘generation rent’, and sharpened the appetite of institutional investors for the lucrative private rented sector. Analysts are forecasting that private renting is on its way to becoming a new major asset class in the UK. Private landlords, including increasing numbers of institutional investors, now own 19% of all residential property – up from 12% ten years ago.

Read our full report on the links between inequality and the growth in scale and influence of the financial sector

0.0 ·
What's Next
Trending Today
F*ck That: A Guided Meditation for the Realities of Today's World
2 min · 10,927 views today · Just acknowledge that all that sh*t is f*cking b*llshit — you're here now, in this place, with your inner stillness. Take in a deep breath ... now breathe out. Just feel the...
Free Trade Explained In An Excellent Comic
Michael Goodwin, Illustrated by Dan E. Burr · 7,132 views today · The Trans-Pacific Partnership (TPP), Transatlantic Trade and Investment Partnership (TTIP) and Comprehensive Economic and Trade Agreement (CETA) are the latest in a long line...
Your Lifestyle Has Already Been Designed (The Real Reason For The Forty-Hour Workweek)
David Cain · 5,669 views today · Well I’m in the working world again. I’ve found myself a well-paying gig in the engineering industry, and life finally feels like it’s returning to normal after my nine months...
Noam Chomsky Has 'Never Seen Anything Like This'
Chris Hedges · 5,346 views today · Noam Chomsky is America’s greatest intellectual. His massive body of work, which includes nearly 100 books, has for decades deflated and exposed the lies of the power elite...
Inside the Invisible Government: John Pilger on War, Propaganda, Clinton and Trump
John Pilger · 4,989 views today · The American journalist, Edward Bernays, is often described as the man who invented modern propaganda. The nephew of Sigmund Freud, the pioneer of psycho-analysis, it was...
Open Up - Have the Difficult But Important Conversations With Loved Ones
5 min · 3,894 views today · “The biggest casualty of humanity is the lack of communication, it’s the thing that breaks most relationships. It just feels so much better to talk and get it out.” There is...
Who I'm Voting For...
3 min · 3,829 views today · Prince Ea announces who he's voting for. It's probably not who you think.
Democracy in the Digital Era
Birgitta Jonsdottir · 3,135 views today · Our current democratic models are crumbling and outdated. We need to make something more real and meaningful. Activist and politician Birgitta Jónsdóttir points to how it might...
Today I Rise: This Beautiful Short Film Is Like a Love Poem For Your Heart and Soul
4 min · 2,086 views today · "The world is missing what I am ready to give: My Wisdom, My Sweetness, My Love and My hunger for Peace." "Where are you? Where are you, little girl with broken wings but full...
What Makes Call-Out Culture So Toxic
Asam Ahmad · 1,521 views today · Call-out culture refers to the tendency among progressives, radicals, activists, and community organizers to publicly name instances or patterns of oppressive behaviour and...
25 Mind-Twisting Optical Illusion Paintings by Rob Gonsalves
Dovas · 1,379 views today · The beautiful and mind-bending illusions in Canadian artist Robert Gonsalves’ paintings have a fun way of twisting your perception and causing you to question what in his...
Dinosaur explains Trump policies better than Trump!
8 min · 1,052 views today · Donald Trump is actually the corporate triceratops, Mr. Richfield, from the 90's TV show sitcom, "Dinosaurs". 
Forget Shorter Showers: Why Personal Change Does Not Equal Political Change (2015)
11 min · 1,030 views today · Would any sane person think dumpster diving would have stopped Hitler, or that composting would have ended slavery or brought about the eight-hour workday; or that chopping...
#Hypernormalisation - Why Heathrow Plan Is Proof We Exist in a Catastrophic Fantasyland
Matthew Adams · 927 views today · The British government recently gave the green light for Heathrow airport’s third runway. It was heralded by its supporters as a vital boost for jobs and growth – and proof...
'Maritime Graveyard': 2016 Deadliest Year Ever for Refugees Crossing Mediterranean
Deirdre Fulton · 903 views today · "From one death for every 269 arrivals last year, in 2016 the likelihood of dying has spiraled to one in 88," says UNHCR spokesman
John Lennon's "Imagine," Made Into a Comic Strip
John Lennon. Art by Pablo Stanley · 756 views today · This is easily the best comic strip ever made.  Pabl
The Empire Vs. The People - Police Attack and Arrest Peaceful Protestors at the Dakota Access Pipeline
6 min · 689 views today · On October 22, just before dawn, hundreds of people, including many families, gathered and prepared to march toward the Dakota Access pipeline construction site near Standing...
Ode to Lesvos
5 min · 568 views today · An inspiring story of a few remarkable heroes on the Island of Lesvos who helped almost half a million refugees in 2015 has been documented in a new short film called Ode to...
The White Man in That Photo
Riccardo Gazzaniga · 424 views today · Sometimes photographs deceive. Take this one, for example. It represents John Carlos and Tommie Smith’s rebellious gesture the day they won medals for the 200 meters at the...
HyperNormalisation (2016)
161 min · 394 views today · We live in a time of great uncertainty and confusion. Events keep happening that seem inexplicable and out of control. Donald Trump, Brexit, the War in Syria, the endless...
Load More
Like us on Facebook?
Why the UK Leads the Way on Inequality