Household debt
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Inequality & poverty
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Wealth & assets

Arrears fears

The distribution of UK household wealth and the impact on families

Molly Broome
Molly Broome
Jack Leslie
Jack Leslie

The defining economic challenge for UK families at the moment is the cost of living crisis, rising inflation threatens living standards in the UK as real incomes fall. Owning wealth helps protect against the adverse effects, particularly for those who can rely on savings. Therefore, the current crisis has thrown wealth inequality into the spotlight.

This report, the third in an annual series of ‘audits’ of wealth in the UK, uses newly available data on differences in wealth across groups to understand the complicated picture of wealth inequality in the UK, the impact it has on people’s lives and its implications for households as the cost of living crisis intensifies.

Key findings

  • Since the mid-1980s, the share or wealth held at the top of the distribution has been fairly stable, with the richest tenth of families consistently owning about half of total wealth.
  • Total household wealth holdings have increased in value from around three-times national income in the 1980s to closer to eight-times.
  • In 2006, the average family in the richest tenth of families had wealth of close to £900,000 more per adult than a family in the fifth decile – by the start of 2020, that gap had increased to over £1.2 million per adult.
  • Rising asset prices have benefitted wealthier families most: a family at the 80th percentile has seen real wealth increase by 37 per cent between 2006-08 and 2018-20.
  • Low-income families are far more vulnerable to the cost of living crisis due to the absence of a savings buffer: the lowest income tenth of families were four-times more likely to have no savings than the richest tenth.
  • 32 per cent of families with no savings say they will need to rely on family and friends to cope with income shocks compared to 3 per cent of families with savings in excess of one month’s income.
  • Bill arrears are strongly concentrated among low-income families: in 2018-20, 8.9 per cent of financial liabilities (excluding student loans and mortgages) were bill arrears for the lowest income tenth of families but 0.3 per cent top tenth.

Related items

Whose wealth boom?
Assessing the UK’s changing wealth gaps
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Molly Broome, Jack Leslie

Further reading

Ineffective Savings Accounts
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Molly Broome
In too deep?
The impact of the cost of living crisis on household debt
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Felicia Odamtten, Simon Pittaway
Precautionary tales
Tackling the problem of low saving among UK households
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Molly Broome, Ian Mulheirn, Simon Pittaway
Molly Broome
Molly Broome Economist
Jack Leslie
Jack Leslie