The Institute for Fiscal Studies reported that wealth had grown rapidly compared to labor gains since the 2008 financial crisis, driven by rising house prices and financial assets – such as stocks and shares – in a period of flattening progress for average wages. Robert Joyce, deputy director of the IFS, said: “A generation of Britons has ridden a wave of rising property prices, driving up the value of their homes and investments. Meanwhile, more than a decade of stagnant earnings has held back younger generations who are finding it increasingly difficult to achieve their own financial success. “The fact that we can no longer be sure that young people will grow up with the same standard of living [those of] their predecessors are a remarkable social change.’ wealth older age groups United Kingdom In a major study as part of the IFS Deaton Inequalities Review, led by Nobel Prize-winning economist Sir Angus Deaton, the IFS found that wealth levels were rising at a much faster rate than income which meant it was now harder for working families to enter the classrooms. of the rich in Britain by hard work alone. He said the time it would take to earn enough to move from middle wealth to the top had increased by almost six years compared to a decade ago. In 2008, it took 10 years of typical full-time gross earnings to move from middle to top wealth. By 2018, this had grown to nearly 16 years. “While income remains important, wealth is increasingly at the center of today’s most pressing economic inequalities,” the report said. The findings come as the chancellor, Jeremy Hunt, is under pressure to raise taxes on wealth in next week’s autumn statement as he tries to find billions of pounds in savings after Liz Truss’ failed mini-budget. Campaigners and economists have argued for a focus on taxing the wealthiest in society instead of fresh cuts to public services after a decade of austerity, and as the succession of economic shocks in the Covid pandemic and the cost of living crisis disproportionately hit the poorest families in Britain. Research by Tax Justice UK, a campaign group, suggests that Rishi Sunak’s government could raise up to £37 billion to help pay for public services and prop up energy bills this winter through a series of taxes on of wealth. The IFS said the pandemic and its aftermath may well have further increased wealth and wealth inequalities. Increases in saving during the lockdown – when consumers put money aside while parts of the economy were closed – were larger for the wealthiest, who also benefited more from rising house prices and financial assets. The country’s top economic think tank said that the rapid increases for those who already had wealth coincided with a long-term stagnation in earnings. This meant that younger adults in particular “could no longer expect to see a significant improvement in living standards as they aged” compared to the faster wage increases and access to cheaper housing enjoyed by their parents’ generation. Subscribe to Business Today Get ready for the business day – we’ll point you to all the business news and analysis you need every morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply.homeowners Highlighting the collapse in home ownership among younger adults, the IFS said only 36% of those born in the 1980s owned their own home by the age of 30, compared with 55% for those born in the 1970s and over 60% of those born in the 1950s and 1960s. House prices have been rising steadily in recent decades and have boomed since the 2008 financial crisis, helped by low interest rates from the Bank of England after the banking crash, before a further sharp rise during the Covid pandemic. The IFS said these trends had acted to increase the proportion of the country’s wealth held by older generations. By contrast, average wage growth has stalled over the past decade, with typical wages worth less today than they were in 2007, after accounting for inflation. The IFS said this combination meant that inherited wealth was becoming more important to the financial resources of younger generations’ lives, as earnings from work grew less influential. A government spokesman said: “Average hourly pay for full-time workers has risen across the board this year – especially for those on low incomes – while the proportion of low-paid jobs is at its lowest since records began. “At the same time, the Government is helping hard-working young people and families to get on the housing ladder by extending stamp duty relief for first-time buyers and offering flexible, innovative home ownership schemes such as Help to Buy and First Homes. “We are on track to meet our target of unlocking 1 million new homes, with £10bn of investment announced since the start of this Parliament.”
