Two months after Britain voted to leave the EU, the growing financial divisions between haves and have-nots in the UK are growing. The author of a recent study on the subject told B2BNN what that might mean for B2B.
According to the latest Financial Inclusion Report from the University of Birmingham that was released on September 12, 2016, there is a growing gap between people who are financially excluded and those benefitting from the slow but steady economic recovery since the crisis of 2008.
“There is an increasing gap between financially excluded people struggling with day-to-day finances and those with mortgages and secure jobs who have benefited from economic recovery following the crash in 2008,” says Karen Rowlingson, Professor of Social Policy at the University of Birmingham and the study’s lead author.
Findings from the study include:
- The number of people without access to a bank account increase by 14% over results from the previous year
- In 2015, there were over 41,000 landlord evictions in England and Wales – up from 27,000 in 2010
- In 2015-16, 1.1 million emergency food parcels were given out by food banks, an 1800% increase over 2010-2011
The findings, however, were not all negative.
- Participation in occupational pension schemes increased from 2.7 million to 4.9 million in the private sector from 2014 to 2015
- Some families increased their savings with one in ten households having amassed £100,000, or more, of their net worth
The findings do, however, cast a pall over the future of Britain.
Following the Brexit vote in June of this year, Mark Carney, the governor of the Bank of England expressed confidence that his institution was ready for the inevitable new economy the decision would bring. Carney said that “the Bank of England will continue to peruse relentlessly [their] responsibilities for monetary and financial stability.” He made the announcement after the pound hit a 30 year low the morning after the vote.
At the time, the question on the top of a majority of Canadian’s minds was what would happen to the Comprehensive Economic and Trade Agreement (CETA), which removed most tariffs on Canadian goods entering Europe. “Working with the UK just got a lot more complicated and unclear, and if there’s one thing that businesses try to avoid, it’s complicated and unclear business arrangements,” said Dana DiTomaso, President of Kickpoint.
More complications may well be on the way.
“The vote to Brexit revealed deep divisions in British society on the basis of age, education and social class,” Rowlingson told B2BNN. “Our research reveals another source of deep division: financial exclusion. Those excluded may feel that they have little at stake in society and this could lead a dangerous weakening of social cohesion.”
B2B consultants, contractors and freelancers, who represent a high number of the sector’s workers in the UK can fall on both sides of the have or have not divide in the UK.
“It is increasingly common for people to work for themselves or be employed on short-term contracts,” Rowlingson said. “Incomes can sometimes be high in such circumstances and so the lack of job security may not cause any worries. But if people in these circumstances take on large mortgages or consumer credit, this can cause serious problems later on if their income falls.”