The Growing Wealth Gap in the UK: A Risk to Social and Economic Stability
As accountants at Cutts and Co, we often find ourselves at the intersection of personal finance, business health, and broader economic trends. One issue that has been increasingly prominent in recent years is the widening wealth gap in the UK. This disparity not only raises concerns about fairness and equality but also poses significant risks to the country’s social, economic, and democratic fabric.
The Scale of Wealth Inequality
Wealth inequality in the UK is far more pronounced than income inequality. According to the Office for National Statistics, the richest 10 per cent of households hold a staggering 43 per cent of all wealth, while the poorest 50 per cent own a mere 9 per cent.
This imbalance is further highlighted by the fact that by 2023, the combined wealth of the richest 50 families in the UK exceeded £466 billion, which is more than the combined wealth of half of the UK population, comprising 34.1 million people. This concentration of wealth is not just a matter of numbers; it has real-world implications for economic stability and social cohesion.
Regional Disparities
The wealth gap is not uniform across the UK. There are significant regional disparities. The South East stands out as the wealthiest region, with median household total wealth of £503,400, more than twice that of households in the North of England. Much of this wealth imbalance is driven by property wealth, which has seen substantial growth in recent years.
The Growing Wealth Gap
Between 2011 and 2019, the average UK household’s wealth grew by about £4,000. However, this growth was highly uneven. Those in the poorest 10 per cent of households saw no increase in wealth and many remained in debt. In contrast, the average person in the top 10 per cent of households became £280,000 wealthier over the same period. This has resulted in a 50 per cent increase in the wealth gap over these eight years.
Passive Wealth Accumulation
One of the key drivers of this wealth concentration is the passive accumulation of wealth, particularly through rising housing prices. While these increases have benefited many homeowners, they have also exacerbated the divide between those who own assets and those who do not. The lion’s share of these gains has gone to those already in the top 10 per cent, with the top 1 per cent and 0.1 per cent doing exceptionally well.
Economic and Social Risks
The growing wealth gap poses several risks to the UK. Economically, it can lead to reduced consumer spending and economic growth, as a smaller portion of the population holds a larger share of the wealth. Socially, it can erode trust in the economic system and foster feelings of injustice and inequality. This can ultimately lead to social unrest and political instability, as people become disillusioned with a system that seems to benefit only a few.
Policy Implications
Addressing the wealth gap is crucial for maintaining social and economic stability. Policymakers need to consider measures that promote greater wealth distribution. This could include policies aimed at increasing access to asset ownership, such as affordable housing initiatives and financial education programmes. Additionally, progressive taxation and wealth redistribution policies could help mitigate the extreme concentration of wealth.
Conclusion
The growing wealth gap in the UK is a pressing issue that requires immediate attention. As accountants, we see the financial health of our clients and the broader economy being affected by these disparities. It is essential for policymakers, businesses, and individuals to work together to address this issue, ensuring that the wealth generated in the UK benefits a broader segment of the population.
By doing so, we can build a more equitable and stable society, where economic growth is inclusive and sustainable for all.
