Snakes and ladders: The shifting sands of wealth in Britain

The story of wealth across Britain has, until recently, been a straightforward one – decades of rising prices, benefiting those lucky enough to own assets. But that story has been upended in the past few years as interest rates rocketed off their historically low levels in response to the highest inflation in decades. Britain needs to look again at the size and distribution of household wealth, and people’s ability to become wealthier.

What happened to household wealth during the pandemic? What has that meant for wealth inequality? Were some families financially vulnerable even before the cost of living crisis? To what extent do people become more or less wealthy over time? And how does wealth mobility – or the lack thereof – affect people’s lifetime living standards?

1. October 25 @resfoundation Snakes and ladders The shifting sands of wealth in Britain Polly Toynbee, Journalist and Writer Professor Mike Savage, Professorial Research Fellow, International Inequalities Institute Molly Broome, Senior Economist, Resolution Foundation Chair: Lord David Willetts, President, Resolution Foundation

2. 2 Household wealth as a share of national income: UK/GB Source: Analysis of D Blake & J Orszag, ‘Annual estimates of personal wealth holdings in the United Kingdom since 1948’, Applied Financial Economics 9, 1999; ONS, UK National Accounts; ONS, Wealth and Assets Survey; ONS, Gross Domestic Product at market prices. @resfoundation Before the fall

3. 3 Household wealth as a share of national income: UK/GB Source: Analysis of D Blake & J Orszag, ‘Annual estimates of personal wealth holdings in the United Kingdom since 1948’, Applied Financial Economics 9, 1999; ONS, UK National Accounts; ONS, Wealth and Assets Survey; ONS, Gross Domestic Product at market prices. @resfoundation Before the fall

4. 4 Share of household wealth held by richest 10 and 1 per cent: UK/GB Notes: See report for full chart notes. Source: ONS, Wealth and Assets Survey; F Alvaredo , A B Atkinson & S Morelli, Top wealth shares in the UK over more than a century, Journal of Public Economics 162, June 2018 (compiled by the World Inequality Database); T Blanchet & C Martínez-Toledano, Distributional Wealth Accounts in Europe: Methodology, World Inequality Lab, January 2022 (compiled by the World Inequality Database). @resfoundation Relative wealth inequality has been remarkably stable

5. 5 Gap between average family wealth per adult in the tenth decile and those in the fifth decile: GB Notes: Data adjusted to 2020-22 prices using CPIH. Source: RF analysis of ONS, Wealth and Assets Survey. @resfoundation But the wealth gap between the top and the middle has grown

6. 6 Ratio of absolute wealth gap between top decile of average family wealth per adult to fifth decile, to median full-time earnings: UK/GB Notes: Median annual earnings are adjusted to 2020-22 prices to match the wealth gaps. Since median annual earnings are reported for April each year, we have averaged them over three years to align with the WAS periods. For example, the 2006-08 figure averages median annual earnings for 2006, 2007, and 2008. Source: RF analysis of ONS, Wealth and Assets Survey; ONS, Annual Survey of Hours and Earnings. @resfoundation It is harder for people to save their way up the wealth distribution

7. 7 Estimated mean change in family wealth per adult over preceding two years, by type of wealth accumulation: GB Notes: Excludes DB pensions and pensions in payment. Source: RF analysis of ONS; Wealth and Assets Survey; Bank of England, Effective interest rates; FTSE Russell, FTSE All-Share Index TR; MSCI, MSCI World Index TR; S&P Global, S&P UK Gilt Index; and ONS, UK House Price Index. @resfoundation Passive gains drove over half of wealth growth since 2010-12

8. 8 Median real family net wealth per adult, by five-year age group: GB Notes: Data adjusted to 2020-22 prices using CPIH. Source: RF analysis of ONS, Wealth and Assets Survey. @resfoundation Wealth gaps between age groups have widened sharply

9. 9 Ratio of the 90 th percentile and the 50 th percentile of net family wealth per adult, by region and nation: 2006-08 to 2020-22 Source: RF analysis of ONS, Wealth and Assets Survey. @resfoundation Wealth is not equally distributed across Britain

10. 10 Proportion of people remaining in the same wealth decile or one decile either side of their initial position in 2016-18 two and four years later, by income group in 2016-18: GB Notes: Sample corresponds to individuals aged 25-54 in 2016-18 and observed in following two survey rounds. Wealth refers to benefit unit per adult measure. Age-adjusted average change in wealth is based on a weighted balanced panel regression, average changes calculated as weighted difference in residuals between respective periods. Source: RF analysis of ONS, Wealth and Assets Survey. @resfoundation Wealth mobility in Britain is limited

11. 11 Proportion of people experiencing positive and negative directional mobility between 2016-18 and 2020-22, by income group in 2016-18: GB Notes: Sample corresponds to individuals aged 25-54 in 2016-18 and observed in following two survey rounds. Wealth refers to benefit unit per adult measure. Age-adjusted average change in wealth is based on a weighted balanced panel regression, average changes calculated as weighted difference in residuals between respective periods. Source: RF analysis of ONS, Wealth and Assets Survey. @resfoundation Lower-income people experience less positive mobility

12. 12 The proportion of individuals experiencing specific life events between 2016-18 and 2018-20, by income group in 2016-18: GB Notes: Wealth is measured at the benefit unit level. Sample corresponds to individuals aged 25-54 in 2016-18. Source: RF analysis of ONS, Wealth and Assets Survey. @resfoundation Lower-income families experience fewer wealth-building events

13. Britain’s wealth boom has widened wealth gaps. Passive wealth gains have disproportionately benefited the already-wealthy. Intergenerational wealth inequality and inequality within regions have increased. Large wealth gaps are doubly concerning as wealth mobility in Britain is severely limited. Policy should consider how to expand asset ownership and strengthening opportunities for accumulation over the life course. 13 Key takeaways @resfoundation

14. October 25 @resfoundation Snakes and ladders The shifting sands of wealth in Britain Polly Toynbee, Journalist and Writer Professor Mike Savage, Professorial Research Fellow, International Inequalities Institute Molly Broome, Senior Economist, Resolution Foundation Chair: Lord David Willetts, President, Resolution Foundation