Around 40% of unemployed and disabled population is in negative financial wealth

New research from LSE finds that not only have the poorest households experienced the greatest growth in unsecured debt to income ratio over the last decade, but the debt is more for essential needs - such as rent, food and utilities - than previously.

Net financial wealth is an important indicator, reflecting the extent to which people are able to cushion their liabilities with their assets. Examining net financial wealth by economic activity reveals some remarkable dynamics with respect to household indebtedness in the pre- and post-crisis periods. Firstly, the proportion of employed and self-employed individuals in negative financial wealth (net debtors) has risen after the crisis. Secondly, and more importantly, those whose needs are supposed to be covered through the welfare state such as the unemployed, sick and disabled and their carers have been net debtors by greater proportion in comparison to other household categories. This was the case both before and after the crisis, reflecting the inadequacies of the welfare provision. To be precise, around 40% of unemployed and disabled population is in negative financial wealth.