The Covid-19 crisis has been marked by so-called high-wealth households amassing savings and benefitting from rising house prices far more than those with little or no wealth.
That’s the view of think tank the Resolution Foundation in a new report.
The study report examines how the pandemic has affected both the level and distribution of household wealth across Britain – from savings and debts, to property and other asset prices.
It claims total household savings are £200 billion higher than they were pre-crisis, household debts (excluding credit cards) have fallen by around £10 billion and house prices – which had fallen by an average of 22 per cent over the previous four major recessions – have risen by eight per cent since February 2020.
The foundation says this has led to led to the first mid-recession wealth boom since the mid-1940s with total UK wealth rising by £900 billion over the pandemic to around £16.5 trillion.
The think tank says the richest fifth of households are four times as likely to have increased their savings during the crisis as the poorest fifth of households and 2.5 times as likely to have reduced their debts.
Specifically the Resolution Foundation says rapid house price growth during the pandemic has primarily benefitted middle-wealth households where property accounts for the largest share of total wealth, and high-wealth households who own the largest amount of property wealth.
As a result, middle-wealth families have experienced the biggest relative wealth increase of nine per cent (up £7,800, taking their average total wealth to £80,500 per adult), while the richest 10 per cent of families have experienced the biggest absolute wealth increase of over £50,000 over the past year (taking their total wealth to £1.4m per adult).
In contrast, the poorest 30 per cent of households have seen an average wealth increase of just £86 per adult over the course of the pandemic.
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 Foundation says the very uneven impact of this wealth surge will be a lasting legacy of this crisis and should be borne in mind by policy makers taking key decisions in the autumn.