British households have experienced the steepest decline in wealth of any wealthy nation since the Covid-19 pandemic struck, according to new research from UBS.
The Swiss bank’s analysis of 37 countries found that typical individual wealth has dropped by approximately £28,500 over the past five years when adjusted for inflation, representing a fall of more than 23 per cent on both mean and median measures.
This dramatic erosion has left the median British adult holding assets worth just over £95,500 last year.
The figures place UK residents marginally ahead of their French counterparts but behind both Dutch and Italian citizens in terms of personal wealth.
UK families have seen the biggest wealth decline of any other rich country
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Notably, British families have fared worse than those in Turkey, Bulgaria, Mexico and Kazakhstan during this period.
Analysts note this decimation in wealth stems primarily from a severe inflation shock that hit Britain harder than other developed economies, with consumer prices surging to a peak of 11.1 per cent in October 2022.
Paul Donovan, the chief economist at UBS Global Wealth Management, attributed this to the country’s unique circumstances:
He explained: “The UK had a brief period of notably higher inflation than Europe did, and that has distorted the real numbers. You had a couple of years of quite high inflation, partly because of the various peculiarities of our energy pricing structure.”
The UBS report gave a damning indictment of the UK economy’s post-Covid recovery
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Britons continues to grapple with the cost of living | GETTY
While house prices increased by 26 per cent since early 2020 according to Office for National Statistics (ONS) data, consumer prices climbed 32 per cent over the same timeframe, effectively diminishing the real value of homeowners’ equity.
Mr Donovan added: “There is a considerable weight to real estate as a form of wealth because it is the largest asset that most people own.
“A change in the relative performance of your local real estate market can have a notable bearing on, in particular, the median wealth level over time.”
The UBS findings present a formidable challenge for Andy Burnham as he prepares to enter Downing Street.
Andy Burnham’s victory in the Makerfield by-election could see him as the next Prime Minister | GETTY
Speaking in the Commons this week following his return as MP for Makerfield, the likely next Prime Minister Andy Burnham stated “We cannot go through another decade like the one we have just had. We need a new determination to raise the living standards of every person in this land.”
ONS data published on Tuesday revealed that Prime Minister Keir Starmer has failed to deliver his commitment to boost living standards, with households now in a worse position than when he took office.
The wealth decline coincides with falling business sentiment, with the Institute of Directors reporting that confidence dropped again in June.
A Treasury spokesperson said: “We have the right economic plan. Inflation is holding steady, the UK led G7 growth at the start of the year, and the IMF and OECD have both upgraded growth forecasts. Real wages have risen more in the last year than in the first ten years of the previous Government.”