In the News
UK sees first mid-recession wealth boom since the mid-1940s
According to new data from the Resolution Foundation, the UK is experiencing the first mid-recession wealth boom since the 1940s.
Total household savings are £200bn higher than they were pre-crisis, household debts (excluding credit cards) have fallen by around £10bn.
House prices – which have fallen by an average of 22 per cent over the previous four recessions – have risen by 8 per cent since February 2020.
However, as one might expect, the surge in financial wealth among millions of UK households is marked by growing inequality.
The gap between the average and the wealthiest 10 per cent of households has increased by £44,000 during the crisis (following a £350,000 increase between 2006-08 and 2016-18), while the gap between the average and the poorest tenth of households has also grown by £7,000 during the crisis (a bigger increase than seen during the whole 2006-08 and 2016-18 decade).
The poorest households have been most exposed to reductions in employment from recession-induced lay-offs and contractions in income despite the furlough scheme.
They have lower savings in absolute terms and are thus exposed to high interest rate unsecured loans when unexpected bills arrive. In addition, home-ownership among households in the lower deciles of the income distribution are significantly lower. The majority must rent and housing rents have surged due to a lack of affordable properties.
This new data provides some useful context as the government makes a final decision over whether to end the temporary £20 a week increase in universal credit.