Monday 12 July 2021 6:00 am | Updated: Friday 09 July 2021 4:01 pm

UK household wealth swells £900bn during Covid pandemic

Rising levels of wealth during the Covid pandemic was the first time household wealth has increased during a recession in 70 years

The stock of household wealth in the UK swelled by £900bn to £16.5 trillion over the course of the Covid pandemic, according to new figures published today.

Research carried out by the Resolution Foundation shows middle-wealth families have experienced the biggest relative wealth rises of each household group, up 9 per cent, or £7,800, taking their average total wealth to £80,500 per adult.

The figures – included in a report titled (Wealth) Gap Year, published in partnership with the Standard Life Foundation – notes that rising levels of wealth during the Covid pandemic was the first time household wealth has increased during a recession in 70 years.

The increase has been driven by surging house prices and high levels of savings contributions providing a windfall for middle and high wealth households.

House prices in the UK are 8.8 per cent than they were a year ago, up to £260,358 in June, according to the latest Halifax house price index.

Jack Leslie, senior economist at the Resolution Foundation, says: “The Covid-19 crisis has seen a highly unusual combination of a sharp reduction in economic activity, and a sharp increase in household wealth.”

“Many families have been forced to save rather than spend during lockdowns, while house prices have continued to soar even while working hours have plummeted.”

Covid widens wealth gaps

However, the report highlights that the Covid crisis has widened wealth gaps between richer households and those that had little to no wealth before the pandemic.

The Foundation’s research shows 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 rising wealth and widening wealth gaps that marked pre-pandemic Britain have been turbo-charged by the crisis” Leslie added.

“Not all households have benefitted from this unlikely wealth boom. The poorest households are more likely to have run down rather than increased their savings, and haven’t shared in Britain’s house price bonanza as they’re less likely to own a home in the first place.”