UK wealth gap increases by £300,000 since 2006, Resolution finds

BRITAIN'S wealth gap increased by £300,000 (S$501,346) in the 14 years to 2020 as the richest 10th of households pulled further ahead thanks to rising house and asset prices, according to the Resolution Foundation think tank.

Although their share of total wealth has remained stable since the 1980s, the gap in cash terms between them and the middle 10th of households increased from £900,000 in 2006 to £1.2 million in 2020, after adjusting for inflation.

Rising asset prices increased wealth by equivalent amounts across all households but the boom has meant those with larger pots to begin with moved ahead, Resolution said in a report Wednesday (Jul 20). That's driving bigger gaps in society just as the poorest face a collapse in real incomes.

Wealth gaps matter because they prevent people gathering wealth, owning property and boosting lifetime living standards, Resolution said. A lack of wealth can limit their ability to withstand shocks and rising cost pressures.

"Increasingly the UK is becoming fragmented and divided with too many families facing a bleak future," said Jack Leslie, senior economist at the Resolution Foundation.

"As the cost of living crisis deepens it's those on lower incomes who are most in need of a savings buffer to help them through these hard times. Yet they are the ones who are less likely to have any assets and have seen little growth in any assets they do own."

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Household wealth boomed while incomes stagnated, making it harder for younger generations to become homeowners.

Wealth has increased from around 3 times national income in the 1980s to almost 8 times. Over half of the increase in wealth has been due to passive factors, such as rises in asset prices.

Arrears Fears, an annual wealth audit carried out with the abrdn Financial Fairness Trust, also found:

• The richest tenth of families own around half of total wealth
• The share of total wealth owned by those aged 65 and older rose from 42 per cent in 2006-08 to 51 per cent in 2018-20, while younger cohorts are accumulating wealth at a much slower rate than older age groups at the same age
• Wealth is also not being "levelled up", as London and the South East are pulling further away. The share of wealth held by families living in the south of England, including London, rose from 42 per cent of total wealth in 2006-08 to 46 per cent in 2018-20
• Before the pandemic, 43 per cent of families in the lowest wealth decile said they would run out of money within a week if they lost their main income source BLOOMBERG