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UK household wealth rises to record levels during the Covid crisis

UK household wealth has risen to record levels during the coronavirus pandemic, backed by rising house prices, rising defined benefit pensions and government support, official figures said Thursday. ..

Household net worth increased to £ 11.4 trillion. That’s £ 172,000 per capita in the UK.The National Bureau of Statistics said this was due to rising house prices 8.5 percent In the year to December 2020, the government, whose balance sheet fell further into the red, protected wealthier and older people from the financial consequences of Covid-19, improving pension assets and increasing savings. did.

UK government debt has outstripped assets since 2008, and the negative net worth of both local and central governments is estimated by the National Bureau of Statistics to fall by £ 350 billion last year to minus £ 1.35 trillion. ..

Increasing housing wealth amid rising public sector debt will raise questions about intergenerational equity in the UK economy.

Ashley Seager, co-founder of the Intergenerational Foundation, a campaign group that promotes the interests of young and future generations, said the numbers represent two issues facing young people.

“The first is the transfer of housing assets from young borrowers to older homeowners. The second is a pile of government debt that has grown thanks to Covid-19, which is a lower standard of living, It will be passed on to the younger generation, with more volatile employment and much lower pensions in old age. ”

ONS figures show that household balance sheets have improved by £ 950 billion and total net worth has reached £ 11.4 trillion. That’s more than four times the size of 1995, when the balance sheet was first issued, but the size of cash has risen 2.5 times that of the economy.

Of the increase in net worth, households came from a significant increase in the value of housing stock, an increase in the value of final salary pensions, and an increase in cash savings due to people spending less than their income.

Torsten Bell, director of the Resolution Foundation think tank, said: “Due to the nature of the Covid-19 crisis, households were protected on their balance sheets while the government balance sheets were affixed.

“Homeowners and the rich have done well, but young people will have to make decisions about how to deal with higher public and private debt in the future,” he added.

“We wanted to improve our household balance sheet because we had more homes than we had higher home prices,” said Kate Barker, a housing expert and former member of the Bank of England’s Monetary Policy Committee. It was.

Negative net worth is rare among developed countries, as the UK government has been ahead of most other governments in selling assets over the last 40 years.

Its total non-financial assets were £ 842 billion in 2020, with an additional £ 858 billion in financial assets, but these numbers were reduced primarily by the sum of financial liabilities in the form of government debt, 2020. It reached £ 3 trillion at the end of the year.

UK household wealth rises to record levels during the Covid crisis

Source link UK household wealth rises to record levels during the Covid crisis

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