Boons for boomers and busts for babies

Afternoon all,

The leaves are falling in earnest, parliament returns from conference recess next week and coffee chains are flavouring their drinks with gourds…autumn is well and truly here, and the Budget countdown has begun (47 sleeps to go!).

We’re throwing a wide net this week with reads on trade, pay volatility and declining fertility. Chart of the Week considers the substantial wealth gains experienced by (largely, older) Brits in recent years.

Have a great weekend,

Ruth
Chief Executive
Resolution Foundation

Shakin’ all over. We recently showed that nearly six-in-ten UK workers experience pay volatility. This new research (summarised here) uses payroll data from 2010 to 2023 to show that pay volatility is even higher in the US, with workers’ pay checks differing to the previous month nearly three quarters of the time. This leads to volatile spending, plus workers quitting high-volatility jobs. The researchers estimate the median hourly worker would forgo as much as 11 per cent of their income in exchange for stability. Critically, this volatility is not felt equally, with hourly and low-wage workers experiencing much more of it. That’s worrying, because other analysis has recently found that greater volatility is associated with poorer health, irrespective of income level. That study examined income volatility in the UK and France and concluded it is as likely to account for divergent health outcomes as the level of income itself.

World wide wealth. For the first time, we have a global database of wealth accumulation back to 1800, with key findings and charts summarised here (full paper here). The data shows the global wealth to income ratio has increased dramatically since 1980 – from 390 per cent to over 625 per cent in 2025 – and looking back to 1800 indicates the scale and speed of this increase is unprecedented. Notably, it is *private* wealth that has soared, while global public wealth has fallen from around 30 per cent of all wealth in 1980 to just over 10 per cent today, driven by privatization and rising public debt (Britain and the US now have negative net public wealth). The researchers suggest the large historical and regional variations seen are explained by policy choices and changing institutions and ideology, as opposed to purely economic or technological factors. Want more detail on the distribution of household wealth in Britain? Check out our latest wealth audit.

Trade crusade. Determining the long-term effects of tariffs that change so often it can feel like mopping the floor while it’s raining. So kudos to the Peterson institute for trying. This article forecasts the effects if US tariffs as they were on 11 September continued unamended. It quantifies reduced wages and increased prices for ordinary Americans (full dashboard here). The authors found that inflation will be 1 percentage point higher in 2025 and real GDP growth 0.62 percentage points lower in 2026. Employment effects will be most visible in the manufacturing sector, which is on track to see an almost 6 per cent fall in employment by next year. Not quite what Trump supporters were promised…

Bye bye baby. People are having fewer babies and it means our demographic challenges are only on the rise. But why? This paper (paywalled, but summary here) finds that falling birth-rates (in high-income countries) can’t be chalked up solely to economic factors – given that neither financial incentives from governments nor individual experiences of increased income mitigate the widespread decline in fertility. The authors nod to broader cultural shifts including “increased intensity of parenting, peer effects, media influences, and declining religious observance” as plausible explanations. Claudia Goldin, an authoritative voice in this space, recently published a paper which argues that the baby bust may be caused by a mismatch between care-giving expectations between men and women. Women now need their partners to “reliably demonstrate their commitment” to child-rearing before embarking on parenthood – a cultural friction which some couples don’t resolve. Want more on this? Check out the latest FT podcast with Sarah O’Connor and Martha Baliey.

Something for the weekend | Chancellor chin wag 

Treasuries the world over will be emptying next week as finance ministers and central bankers gather in Washington D.C. for the International Monetary Funds (IMF) Annual Meetings.

Created to rebuild the tattered global economy after World War II theAnnual Meetings take place during an existential time for the IMF. Having initially threatened to withdraw US membership, the Trump administration now has a man on the inside, in Daniel Katz newly appointed First Deputy Managing Director, to implement the reforms US Treasury Secretary Scott Bessent has been calling for. As if an organisation committed to promoting “open, stable and transparent” trade didn’t have enough on its plate.

We’ve already had opening remarks from Managing Director Kristalina Georgieva that the world economy is doing “better than feared, but worse than we need”. All eyes will be on the detail of the IMF’s forecasts released on Tuesday, not least since they will inform the OBR’s assumptions for the world economy in the upcoming Budget.

The conference itself runs from Monday to Saturday, with a G20 dinner on Wednesday evening, and the plenary on Friday. There’s a good overview of the issues on the agenda here. We’ve already had some teasers. Take your pick from fiscal gloom, emerging market resilience or industrial policy advice.

Chart of the week

There’s a lot of pre-Budget chat about wealth taxes. But how much wealth does Britain have to tax, who owns it and what did they do to they get it? Our latest annual wealth audit has sought answers. One objection to wealth taxes is that accumulated wealth is the well-earned result of a families’ studious toil, and shouldn’t be taxed twice over. But is that true? Chart of the Week suggests not. It breaks down wealth gains into two categories – active behaviour such as paying down student debt, buying a home or saving for retirement – and passive behaviour such as rising property prices. While these active decisions drove up household wealth in the early 2010s, the spiralling value of bricks and mortar have done most of the work since then, and all the work for pensioners. That’s why wealth gaps between people in their early 30s and early 60s more than doubled in real cash terms since the eve of the financial crisis. The wealth tax debate shouldn’t be separate from the one about how we tax property and pensions – that’s where most of the country’s wealth sits.