While the US has seen a significant rise in wealth inequality over the past 40 years, Britain has not, according to an analysis by the Resolution Foundation.
This is despite household wealth doubling in this period in Britain, according to research published by the left-leaning think-tank this week.
In Britain, the share of the top 1 per cent in household wealth has inched up by only a single percentage point since 1980.
By contrast, the 'very rich' in the US grabbed an additional 12-point share in parallel, Simon Pittaway and Tom Clark, of the Resolution Foundation, said.
'Whether you look at the top 1 per cent’s share of all assets, the 10 per cent’s share or summary statistics such as the Gini [a statistical measure of income inequality], the inequality of wealth looks flat as a pancake', Pittaway and Clark added.
Back in 2006, the average value of wealth for an adult in the top-tenth wealth bracket was £1.1million more in today’s money than that for someone roughly in the middle.
'Today, despite that very recent fall in aggregate wealth as interest rates have risen, that same gap has increased to £1.3million', the Resolution Foundation said.
The findings suggest that Britain's main problem has not been the rise of wealth inequality, 'but simply the rise of wealth', notably in the context of the ratio between the value of households’ assets and national income.
Pittaway and Clark said: 'In the last few years, this ratio has swung around dramatically.
'First, wealth surged to new heights in the pandemic. Interest rates plunged to record lows, boosting house prices and pushing up the “snapshot” value of accrued pensions by raising the capital required to buy any given income.
'Then, more recently, rising rates prompted a rapid reversal on both fronts, at one point knocking an extraordinary £2trillion from total household wealth.
'And yet through these dramatic recent ups and downs, the big picture remains: the wealth-to-income ratio is still about twice what it was before 1980.'
The £2.6trillion drop in total household wealth between the first quarter of 2022 and the final quarter of 2023. The shifting value of pensions and move away from defined benefit schemes played a part in this drop, the report said.
According to the research, 'bigger wealth' makes life more unequal even when wealth inequality isn’t rising, because wealth is 'always and everywhere more unequal than income: roughly twice as unequal in fact.'
Inequality in wealth between age groups rising
The Resolution Foundation suggests that headline stable wealth inequality hides a more nuanced picture.
It claims that inequality between age groups has risen, stating: 'In 2018-20, median wealth among Britons in their 60s was 55 per cent higher in real terms than among those of the same age in 2006-08, whereas median wealth for those in their 30s was a third (34 per cent) lower.'
Looking at the period between the 2008 financial crisis and the pandemic, wealth in Britain became 'much more unequally shared' between young and old, the findings suggest.
The fortunes of young and old continue to be inextricably linked to home ownership trends, the Resolution Foundation said in its Inequality Control report.
Between 2006 to 2008, the proportion of 35 to 44-year-olds owning their home stood at around 73 per cent. Between 2018 to 2020, this figure fell to 66 per cent. Within this age group, those less well off were increasingly unlikely to be able to get on the property ladder.
According to the Resolution Foundation, the opposite trend was seen in older age groups with rising home ownership rates concentrated at the bottom of the wealth distribution.
Inherited assets and wealth also look set to continue to play a 'historically large role' in shaping the distribution of wealth across different age groups.
