How is Interest creating an unequal society in the UK?
In the UK, household debt has reached alarming levels, rising steadily over the last few decades. It is estimated now that the average debt per UK household is now £65,380. At the end of 2023, debt-to-household income ratio stood at 124%. As the UK population spends more and more on servicing debt payments, the financial strain forces families to cut back on essentials like healthcare, education, and even food, as they struggle to meet their debt obligations.
The interest payments that households make flow directly to wealthy individuals and financial institutions. This isn’t accidental—it’s by design.
Those with assets, in particular financial assets like bonds, stocks, and loans, receive these interest payments as passive income, facilitating a wealth transfer from the lower- and middle-income households to the affluent. According to a report by Positive Money, interest transfers income and wealth from the bottom 90% of the population to the very top 10%.
This systemic flow of wealth from the poor to the rich is a key driver of the widening wealth gap in the UK. The Office of National Statistics reported in 2022 that the wealthiest 10% of households held 43% of all the wealth in Great Britain in the latest period; in comparison the bottom 50% held only 9%. This disparity has been exacerbated by an interest-based financial system that allows the wealthy to grow their assets at the expense of everyone else. As debt levels rise, the poor are trapped in cycles of repayment, while the rich continue to accumulate wealth—widening the gap between the "haves" and the "have-nots."
Whilst interest is said to fuel growth, this blog highlights the true cost of this ‘growth’ on society. We believe a growing economy should benefit all those in society, not only a select few.
When we make choices about interest in consuming or benefitting from it, we are directly and indirectly contributing to a world with real consequences.
Wahed’s vision is to create a world free from interest. We believe that growth should come from real economic activity, and wealth should be built sustainably, from investing in real assets. We believe by providing professional grade investments that are always free from interest, we aim to create long-term wealth for our clients without sacrificing their faith and values.
Join the 400,000 strong community that believes in this vision too and become an investor with Wahed today.
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As with any investment, a Wahed Invest Ltd investment puts your money at risk, as the value of your investment can go down as well as up. The tax treatment of your investment will depend on your individual circumstances and may change in the future. If you are unsure about whether investing is right for you, please seek expert financial advice.
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