Low-income households worse off after excessive use of credit
BRITAIN’S low- to middle-income households were reliant on borrowing to fund much of their spending for more than a decade before the financial crisis, according to a report out today.
The poorest 10 per cent of families outspent their income by 40 per cent by 2007, the Resolution Foundation revealed today.
These huge burdens in part contributed to the financial crisis, and hit those at the bottom of the income distribution.
From 1997 to 2007, the poorest families saw their incomes grow by 17 per cent and spending grow by 43 per cent.
Meanwhile the top 10 per cent saw disposable incomes rise 13 per cent and consumption jump 28 per cent, hitting the group’s savings ratio.
“Looking to the future, we need growth that is sustained by gains spread across the whole income distribution – not ever more debt for those on the lowest incomes,” said the Resolution Foundation’s Gavin Kelly.