The pandemic made millions richer: but figures hide financial pain
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, comments on ONS publication of wealth figures, which show the pandemic made millions richer: but figures hide financial pain.
Key points from publication:
- Household net worth grew to £11.2 trillion in 2020, a rise of 8.4%.
- This was the second highest growth since the 2008 global economic downturn (after 2014).
- House prices played a massive part in this (40%), as the stamp duty holiday helped fuel a 7.3% rise in house prices.
- The rise in valuations of defined benefit pensions drove another big chunk of the increase, as gilt yields fell.
- A rise in the amount of savings also boosted net worth by 22%.
Sarah Coles says:
“The pandemic made millions of Brits richer, as house prices soared, the value of defined benefit schemes rose, and they saved billions of pounds in savings accounts. But while those who were already secure got better off last year, those who were struggling have been left behind.
“2020 saw the wealth gap widen dramatically. If you already owned a home, had a defined benefit pension and a secure job you could do from home, you were quids in – while people who had none of these advantages were left further and further behind.
“Our research earlier this year showed millions of people are still struggling, and women, renters and those aged 45-54 are particularly vulnerable. There are some financial issues which still make around half of us anxious: 45% of people worry about debt at least sometimes, while 54% are worried their income will fall; and 44% are concerned about bills. More than half are worried about saving for retirement (58%) and building a savings pot to cover emergencies (54%).
“Rising house prices have distorted the overall wealth figures, because while they technically make homeowners richer, only those who are downsizing or remortgaging to free up equity get any benefit. For other homeowners it makes life more difficult, because it’s harder to move up the property ladder. And for those trying to buy a place of their own, it makes it incredibly hard to build a big enough deposit.”
Help if you’re struggling:
“If you’re struggling to make ends meet, then chances are you’ve already done the first step of drawing up a budget and working out how you can cut unnecessary spending. It’s also worth exploring every possible avenue for help. This includes making sure you have applied for any benefits you may be entitled to. If you’re having trouble negotiating the system, you can get free expert advice from StepChange and Citizens Advice.
“If you’re worried about debt, you need to speak to your lender sooner rather than later, to see what repayments you can afford and what they’ll agree to. This will affect your credit score, but not as badly as if you just miss payments. If you can’t face this, debt charities like National Debtline and StepChange can talk to lenders for you – and help you find a solution.
“If your financial problems are affecting your mental health, Mental Health & Money Advice is a useful, free service, as is the charity Mind. The key is to try and talk about your issues with someone you trust. Your GP should also be able to point you in the direction of local support.”
Kindly shared by Hargreaves Lansdown
Main photo courtesy of Pixabay
