…the rich get richer, and the poor get poorer” runs the old song. Here are some stats to back up that equally old assertion.
This blog is a lift of the series of a half-dozen tweets by Tosten Bell (@TostenBell) of the Resolution Foundation, which provided a highly insightful synopsis of the impact the Covid pandemic has had on relative wealth in the UK.
The results are not quite what you might expect. The anatomy of the Covid wealth boom starts with:
- Savings up £200bn +
- Debt down £10bn +
- House prices up 8%
- Total UK wealth up by £900 billion to £16.5 trillion.
What’s going on? Two unrelated effects. First the direct impact has seen the usual wealth falls for those losing their jobs outweighed by Covid restrictions. This means big spending falls for higher income households, lading to accumulating savings for them.
But the second effect is even bigger. Asset price rises have seen the wealth of those who already had some surge in value. For the UK that is mainly about housing but elsewhere (e.g US) shares have also boomed.
For the first time we’ve combined the effects of spending falls and asset prices surges to see who this wealth boom has benefited overall.
This wealth boom is a big—but very unequal—deal. The typical adult has seen a £7,800 windfall – but the average increase is just £86 for the poorest 30% vs over £50,000 for the top 10%. The middle have done best in terms of a percentage rise, because they are most reliant on property.
So wealth gaps have risen AGAIN – the gap between the middle and wealthiest 10 per cent has increased by £44,000 mid-crisis (on top of a £350,000 increase in the pre-crisis decade). It’s these wealth gaps that are redefining who does/doesn’t feel like the country works for them.
This is very much continuing the pre-crisis trend of wealth gaps rising because household wealth is rising so much faster than income (note it’s the growth in household wealth NOT rising wealth inequality that is doing the work here
For a lot more detail on this comprehensive take on what the pandemic has done to household wealth read our annual Wealth Audit, available via Rwitter from @jackhleslie @krishansays – with the kind support of @standardlifefdn. See also the Resolution Foundation at: