Inequality control

The turbulent 2020s have had profound implications for household wealth in Britain: lockdowns pushed saving to unprecedented highs, asset prices surged and then tanked, and high inflation eroded the real value of wealth. This recent turbulence came on the back of decades of rising wealth. But, unlike elsewhere, relative wealth inequality in Britain did not soar during the era of rapidly rising wealth. This report discusses what lies behind this puzzling stability, which is key to understanding the reality of wealth inequality in Britain today and how it might evolve in future.

We find that the headline of stable wealth inequality hides offsetting changes in inequalities between and within age groups. Between the financial crisis and the pandemic, the gap between young and old widened, but a more equal distribution of wealth among older Britons kept a lid on headline inequality. The sharp fall in total wealth in the 2020s has reduced the gap between young and old, but a lot of wealth remains on older households’ balance sheets that will continue to cascade down via inheritances and financial gifts. Policy should, do more to deal with the present reality of Britain’s unbalanced wealth landscape.