Introduction to Britain’s Wealth Gap
Britain’s wealth gap is widening, and it has become virtually impossible for a typical worker to save enough to become wealthy. A report by the Resolution Foundation found that it would take average earners 52 years to achieve savings that would take them from the middle to the top of the wealth distribution.
The Scale of the Problem
The total amount needed to achieve this would be around £1.3 million, assuming that almost all of their income is saved. The wealth gaps are "anchored," meaning that who your parents are and what assets they may have become more important to your standard of living than how hard you work.
Causes of the Wealth Gap
While Britain’s wealth has "grown dramatically" in recent decades, it has been driven mainly by periods of low interest rates and increases in asset values, rather than wage growth or new property purchases. Household wealth reached £17 trillion in 2020, with 5.5 trillion (32%) held in property and 8.2 trillion (48%) held in pensions.
Intergenerational Inequality
The report found that the wealth gap between people in their early 30s and those in their early 60s more than doubled between 2006-08 and 2020-22, from £135,000 to £310,000 in real cash terms. Regional inequality remains a problem, with median average wealth per adult higher in London and the South East.
Potential Solutions
The report’s findings have led to calls for a wealth tax, with some arguing that it could help to reduce the wealth gap. However, others have suggested that a wealth tax could have unintended consequences, such as falling on pensioners, southern homeowners, or their families, rather than just the super-rich.
The Complexity of Wealth Taxes
Molly Broome, senior economist at the Resolution Foundation, noted that all wealth taxes are paid by more than just the country’s wealthiest citizens. She emphasized the need for honesty about the potential impact of higher wealth taxes, which could affect a broader range of people than just the very rich.
