Lower income families left behind in UK’s wealth bonanza
The Office for National Statistics’ Wealth and Assets Survey shows that wealth across the UK increased by 13% in real terms in the two years to 2014-16.
However, while Britain has continued to excel at generating wealth – which reached a record high of £12.8trn – inequality remains high with lower income families and younger people missing out.
The Resolution Foundation research found that the baby boomer generation hold around half of the nation’s wealth, while millennials account for just 2% of it.
Lower-income households also miss out. Typical wealth among the poorest fifth of households fell in real-terms between 2012-14 and 2014-16. Wealth inequality remains nearly twice as high as income inequality as falling homeownership has driven up housing wealth inequality, while the growth of private pension coverage, accelerated by auto-enrolment, has lowered inequality.
The Foundation argued that the UK needs to do a better job of distributing wealth through taxation. Its recent analysis showed that revenues from wealth taxation have remained flat as a share of GDP for half a century, while wealth has more than doubled compared to national income.
Conor D’Arcy, senior policy analyst at the Resolution Foundation, said: “Britain is very good at generating wealth, but terrible at spreading it around the country and even worse at taxing it properly. As a result, we have unacceptably high levels of wealth inequality.
“Young people in particular are feeling the effects of Britain’s wealth divide. Our large millennial generation own just 2% of the nation’s wealth. This stems from their struggle to get on the housing ladder, boosting other people’s wealth in the private rented sector, rather than building assets of their own.”
D’Arcy added that without more effective taxation, there will be more and more pressure on working households.
Robert Szechenyi, investment director at Rathbones, said: “Despite strong economic headwinds and political uncertainty, it’s encouraging to see that household wealth in the UK has been growing, particularly in regions outside the South East such as Scotland. This sentiment chimes with recent research we undertook of over 1,000 investors, which found that close to a fifth were more positive about their finances than the previous year. This shows that, despite some adverse conditions, shrewd investment strategies have the potential to reap rewards. But there are more volatile times ahead, so investors must prepare robust investment strategies to manage any roadblocks.”