Interest rate rises drive biggest postwar fall in UK household wealth

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Surging interest rates have driven the biggest fall in British households' aggregate wealth in the postwar era when measured as a share of national income, according to a new report.

Article originally published by The Financial Times. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

Published by

17 Jul 2023

The aggregate wealth of British households has dropped by £2.1tn in cash terms, the report by the Resolution Foundation think-tank estimated — but it concluded that tighter monetary policy could produce winners among younger people.

UK households’ wealth comprised 650 per cent of national income in early 2023, down by nearly 200 percentage points since early 2021, the report said.

Ian Mulheirn, research associate at the Resolution Foundation, said over the past four decades wealth had soared across Britain “but rapid interest rate rises have ended this boom and brought about the biggest fall in wealth since the war”.

This is largely the result of a decline in asset values, including house prices, and the value of government and corporate bonds. Falling bond prices have reduced the value of pensions, normally the biggest single source of household