Household wealth in GB, 2018-20

Date : 10 January 2022

ONS has issued a new analysis of household wealth in Great Britain, covering April 2018 to March 2020 (ie: just before arrival of COVID-19).

Rather than income, this data examines the distribution of accumulated wealth – cash savings, real estate, assets, pensions and so on.

Wealth is not necessarily liquid or readily fungible - it is possible for an individual to be “asset-rich”, but also “cash-poor” – but it may be assumed that wealthier households are more resilient than others.

Four key points stand out:

Low financial resilience amongst the poorest households

The poorest 10% of households possess less than 1% of total private pension wealth and have negative net financial assets (ie: they have debts that exceed savings).

This leaves them exposed to “shock” events (eg: job loss, interest rate changes) and, in some cases, they are poorly prepared for retirement.

Other studies (eg: the DWP Family Resources Survey) have previously revealed the low resilience of the poorest households and this finding is supported in the new ONS data.

Property is key

Property accounts for about 36% of total GB household wealth – property prices therefore are a key determinant of overall prosperity and confidence.

Property is even more important in the South East which has the highest prices and the greatest long term appreciation.

Oddly, property is less important as a store of wealth in London, but this is because rates of property ownership in the capital.

Wealth increases with age

Time gives the opportunity to invest in savings and pensions and also allows property to grow in value. Median wealth for households aged 55-65 years is more than six times higher than for those aged 25-34 years.

Unsurprisingly, over 55s account for a disproportionate share of household wealth. Wealth may decline slightly post-retirement, however, as households begin to draw on their savings.

Inequality is not increasing

The Gini Index (aka Gini Coefficient), which measures the way wealth is distributed across the population, was 0.36 in 2020 (higher numbers indicate greater inequality).

This indicates slightly more inequality than other North European countries but much less than the USA. GB is not out of line with the global average of 35.5.

The Gini Index in GB has been fairly stable, since at least the mid 1990’s, despite dramatic changes in economic and social structures in that time.

This might be seen as positive, in that inequality is not growing (contrast with the USA), but it also suggests that measures to improve equality (now called “levelling-up”) have been of limited effect.

Median GB household wealth

Source: Household Total Wealth in GB, ONS, January 2022

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