What we are doing for our community during the uncertain economic period.
After a difficult beginning to the decade, conversations have turned to whether the wealth divide between the richest and poorest in society has widened. A 2022 study discovered that the UK wealth gap had increased by £300,000 since 2006 in the years leading up to 2020, leaving those without money most at risk. And there can be little doubt that the pandemic and cost-of-living crisis have only worsened matters.
In this article, we explore what this divide means for those most vulnerable in our society and how we are aiming to help.
A deepening crisis?
In early May, the Bank of England increased interest rates to an almost 15-year high. However, the UK is now expected to sidestep a recession and overall inflation could fall by 5% by the end of the year if things go well. This was the view set out by Chancellor of the Exchequer Jeremy Hunt who claimed that the UK was on track but agreed more needed to be done to help families.
Despite this positive news, recent figures show that many people across the country are still struggling, and we can’t forget that even if inflation reduces it still means prices are increasing for people, just not as fast as they have been over the last 12 months.
Even though everyone has felt the impacts of the cost-of-living crisis in their own way, it is those without inherited wealth or high-salary jobs that will feel the pinch the most. Recent studies showed that the richest 1% of Britons hold more wealth than 70% of the country.
Much of the UK’s wealth is associated with property and this is an area where the divide is most evident. The over-65s housing wealth has hit record highs, with many already paying off their mortgage debt. In comparison, up to 2.6m people aged 18-34 are living in poor-quality housing as they navigate ever-increasing rents and rising mortgage rates for those few able to afford to buy a home.
For many young people, having financial assistance from their parents is the only way to get on the property ladder, however, for those from families with lower incomes and few assets, this won’t be an option creating a never-ending cycle that continues to reduce social mobility and dampen aspiration.
Economic support to help close the gap
As a response to the cost-of-living crisis, the onus has been on both the Government and employers to raise salaries across the country. At the beginning of the year, UK employees had deemed a 9% increase in their wages as fair in response to the inflation rate at the time.
In April, the National Minimum Wage and National Living Wages increased for millions of people. For the National Living Wage, this was the largest ever cash increase since its introduction in 2016. However, people are beginning to take things into their own hands, with many planning to leave their jobs for higher-paying alternatives. A recent study found that 34% of people said that they were motivated by a higher salary and so would be tempted to move companies as a result.
In addition, unemployment rates are also increasing, growing to 3.8% in the three months to February 2023, whilst homelessness continues to surge. Last year, 290,330 households faced potential homelessness, up 6% from the previous year with little to suggest that the Government is actively addressing this issue. Homelessness not only destroys wealth but can also lead to multiple mental and physical health issues, as well as costing us all as local authorities respond to crises with their own limited resources.
How we’re helping
More support is vital to help people across our societies to thrive in the face of adversity, but that doesn’t have to exclusively come from the Government. Here at Great Western Credit Union (GWCU), we're helping to create a society that works for everyone, especially during this uncertain economic period.
We provide affordable, ethical and fair loan and saving services for over 18,000 people across the South West and, by pooling together, we are directly helping local people and communities.
GWCU is building community wealth to strengthen the local economy and create a positive social impact for those that need it most. We’ve also collaborated with charities, local authorities and housing associations and have helped 2,250 people at risk of homelessness to access accommodation and aided 150 families through the UK Resettlement Scheme for refugees. Also, our membership is made up of all areas of society, with 19% of borrowers living in areas of high deprivation and 40% having a household income under £16,000 a year.
The effects of the struggling economy create a greater need for accessibility to fair finance. For this reason, we launched our Bond Offer campaign with a goal of £800,000 to help make purpose-driven finance more accessible. By doing this, we will be able to continue to deliver our services, whilst increasing our focus on our digital platform and employer partnership scheme, Money@Work. Learn more about it here.*
If you would like to find out more about our services, please email or call 0117 924 7309 and one of our support teams will be available to help.
*Please note, any money invested is at risk.