Britons saved the highest proportion of their income since 1962 last year with the accumulation of £150 billion of “accidental” lockdown savings.
The increase in savings, combined with a property boom that drove house prices up by 8.1 per cent, the fastest hike in seven years, has put the national wealth at a record high despite the deepest recession in more than 300 years.
The Office for National Statistics’ annual review of the UK balance sheet demonstrated that Britain was worth £10.5 trillion in 2020, equivalent to £158,000 for everyone in the country and a surge of £400 billion over the year. It was the strongest year of growth since 2016 and, at 4.4 per cent, exceeding the average rate since 2009.
Significantly, the surging wealth came as the economy shrank 9.8 per cent, the worst recession since 1709. In the 2008 financial crisis, the country’s net worth down by £500 billion and did not return to 2007 levels until 2013.
Households alone were worth even more than the nation as a whole after their wealth surged almost £1 trillion to a record £11.4 trillion, equivalent to roughly £170,000 per person.
While household wealth soared, government wealth reduced as the state took on more debt to support businesses and households in the pandemic.
Government liabilities, including pensions and debt, have exceeded its assets since the 2008 financial crisis. However, the deficit jumped by £356 billion last year to top £1 trillion for the first time, at £1.35 trillion.
The boom in household wealth was largely due to speculative asset prices, with £400 billion of the improvement in the value of land, the classic sign of a booming housing market. A further £340 billion generated from higher pension valuations.
House prices up on the back of cuts in stamp duty and interest rates, and deposits expanded by 1.8 per cent due to the £150 billion of “accidental” savings gathered during lockdown, the ONS said. The savings ratio recorded its highest level in almost 60 years last year as wealthy households were unable to spend their income.
The capital stock of the country, which measures the amount of produced wealth, such as building and machinery, increased at its slowest pace since 2015 as investment dried up, rising by only 0.6 per cent to £4.5 trillion.
