Total household wealth is high in Britain. Yet, for many families, it has never felt harder to climb the financial ladder.
That’s the stark message from a new report by the Resolution Foundation, a UK think-tank focused on improving living standards for low and middle-income households.
According to the group, aggregate household wealth swelled to nearly 7.5 times the national income by 2020–22, fuelled by decades of falling interest rates and rising asset prices, lifting the value of homes and pensions.
“Yet, despite this remarkable increase in the overall stock of wealth, relative wealth inequality … has remained broadly stable since the 1980s, with the richest tenth of households consistently owning around half of all wealth,” the report stated.
In 2020–22, the average adult in the richest tenth of households held around £1.3 million more wealth than someone in the middle.
The Foundation attributes around 60% of the pandemic-era rise in average family wealth to passive gains — such as asset prices going up — which directly benefitted those who already owned property and pension wealth.
A lifetime of toiling
The report noted that an average full-time UK worker would need to save their entire earnings for 52 years to match the wealth of someone in the richest 10%.
“These larger wealth gaps, and the growth of wealth relative to incomes, mean that it is more difficult for those lower down to climb the wealth ladder through saving alone,” authors stated.
For example, in 2006-08, the gap in average wealth per adult between the top and middle decile was equivalent to around 38 times typical full-time earnings, compared to 52 times by 2020-22.
At a more realistic savings rate of 10% or 20%, it would take middle earners 520 or 260 years, respectively, to break into the top 10th of earners. An evidently unrealistic hypothesis, since individual human life does not extend to several centuries.
London as the outlier
In London alone, the richest tenth of families held 12 times the wealth of the median household, compared with 3.9 times in the South East — a reminder that the capital’s extremes dwarf even the prosperous counties.
London’s top-to-middle wealth ratio is extremely high by UK standards and reflects the city’s property dynamics. Holding real estate notably turbocharges gains for owners while pushing the ladder further out of reach for newcomers without family help or windfalls.
The pandemic, which is continuously used as a reference period in the report, produced a number of observations. While GDP slumped and working hours fell, the general household balance sheet improved on average, thanks to furlough-style income support and a collapse in opportunities to spend.
Consequently, the adjusted savings ratio peaked at 25% in the second quarter of 2020, an all-time high.
Even so, those in the low-income bracket saw far smaller savings gains during the pandemic, rising by just £80 (€92.21), versus £4,200 (€4,841) for those at the top.
Between 2019-20 and 2021-22, 7% of families in the bottom-income quintile who previously had no arrears fell behind on bills, while no comparable increase occurred among middle- or higher- income families.
Age is not just a number
While age has always played a factor in the fortune accumulated by an individual, the generational wealth gap has widened markedly. The difference in typical wealth held by someone in their early 60s and someone in their early 30s more than doubled between the mid 2000s to the pandemic era, rising from £135,000 to £310,000 (€357,327) in real terms.
Meanwhile, people now in their early 30s have only a small real wealth gain versus same-age peers living in the mid-2000s, at about £8,000 or €9,221.
In other words, older people are getting richer but younger people are finding it more difficult to catch up, widening the wealth gap.
“Our analysis shows that wealth mobility is limited. Having removed the impact of aging on wealth accumulation, the overwhelming majority of people move no more than one decile above or below their starting position over a four-year period,” the report concluded.
Looking forward
For ministers mulling taxes and benefits ahead of the autumn budget, the report is a reminder that total wealth is important — but so is the distribution of that wealth.
For businesses, it explains the persistent consumption puzzle: namely why a nation that is richer on the balance sheets can still feel fragile when it comes to spending.
And for households, it sharpens the stark message: assets beget assets. Without a path to home ownership, it’s getting harder to convert work into security.
The Foundation’s report outlines key recommendations for the state, such as focusing on facilitating secure, affordable homeownership, and expanding pension participation.
Those steps might not erase a £1.3 million gap. But they might, at least, bring the ladder back within reach for those hoping to climb it.
