People wearing face masks among crowds of pedestrians in Covent Garden, London. Rumours were abound in the Sunday newspapers that Prime Minister Boris Johnson, who is due to update the nation this week on plans for unlocking, is due to scrap social distancing and mask-wearing requirements on so-called "Freedom Day". Picture date: Sunday July 4, 2021.
The Covid-19 crisis has seen rising levels of wealth, the first time this has happened during a recession in 70 years, a new study suggests.
The Resolution Foundation said its research also revealed a widening wealth gap as middle and high-wealth households have amassed savings and benefitted from rising house prices.
The think tank said that despite the UK experiencing the biggest economic contraction in more than three centuries last year, levels of household wealth have increased rapidly, in contrast to the falls seen in past recessions.
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 have risen by eight per cent since February 2020, said the report.
This has led to led to the first mid-recession wealth boom since the mid-1940s, said the foundation.
Jack Leslie, senior economist at the Resolution Foundation, said: “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.
“But 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.
“As a result, the rising wealth and widening wealth gaps that marked pre-pandemic Britain have been turbo-charged by the crisis.
“With policy makers facing many tough decisions in the autumn – from protecting households as unemployment rises to paying for a decent system of social care – they can no longer afford to ignore the dominant role wealth is playing in 21st Century Britain.”
Mubin Haq, chief executive at Standard Life Foundation – which helped with the report, said: “Economic downturns don’t usually result in windfalls, but due to the unique nature of this one, many have seen big rises in their wealth during the pandemic.
“The richest tenth have seen their wealth increase by more than five hundred times what the poorest third gained.”
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