Growth and financial exclusion

Fair4All Finance and WPI Economics have launched a report titled Financial inclusion and growth. The report sets out how financial inclusion can be a core part of achieving the UK Government’s growth mission.

The report looks at three key areas; savings, car insurance and better financial wellbeing, and argues that greater financial inclusion in these areas leads to increased growth.

In the case of car insurance, removing the poverty premium would generate an extra £369 million per year for the UK economy. Over the course of this Parliament, UK GDP would be £1.5 billion higher as a result.

This report follows the recent launch of Fair By Design’s new position paper week titled Driving Change: Policy Ideas to Tackle the Car Insurance Poverty Premium.

Fair By Design’s Director, Rebecca Deegan, said:  

“The new analysis by Fair4All finance is further evidence that investing in financial inclusion is good for people and good for the economy.

“Too many people are excluded or are charged more for essentials, paying a poverty premium because of factors they cannot control, such as where they can afford to live. 

“For instance, people living in deprived areas can pay over £300 more on car insurance per year than those living in more affluent areas. But as this new research shows, tackling the poverty premium in car insurance can grow the economy by hundreds of millions of pounds per year.  

“This should be a no-brainer. This is growth that puts money back into people’s pockets. We urge the Government to be bold as it develops the Financial Inclusion Strategy over summer, and include concrete actions to reduce poverty premiums in insurance and credit.”