Household wealth at 'lowest in 60 years' during recession

The amount per person contributed to the GDP fell by 5.5% in 2007, according to new figures. Surprised?

by Emma Haslett
Last Updated: 06 Nov 2012
More news from the department of the bleeding obvious: figures have shown that UK wealth fell during the recession, with GDP per person ‘plunging’ by 5.5% between 2008 and 2009 – the biggest drop since 1949. Household wealth also fell considerably, from £128,000 in 2007 to a low of £109,000 in 2008, mostly as a result of decreasing house prices. Though that might not come as much of a shock – on the whole, recessions tend to have that effect on people’s wealth.

According to the report, from the Office of National Statistics, the average household wealth fell by £11,000 over the course of the recession. By 2009, though, things had recovered, with the average household worth about £117,000 by the end of the year. In fact, by the end of 2009, there were already signs of recovery, when net wealth actually rose by 7.3% compared to its lowest point in 2008.

Household income in 2009 also continued to grow, by 1.2% - the same amount it has been growing each year since the 1980s. The ONS attributes that to low interest rates – but some believe that the Bank of England Monetary Policy Committee might have to hike rates next year to slow rising inflation (which it expects to stay above 2% for at least the next year). One of its members is already arguing for such a move; while another wants a fresh round of quantitative easing, as per the US (which could make the inflation problem worse). As Governor Mervyn King said this week, the picture is pretty unclear at the moment, and the Bank remains firmly parked on the fence.

Speaking of wealth destruction, one firm which has apparently just had an uncharacteristic encounter with it is Swiss investment bank UBS, which has allegedly just been dropped as an underwriter to General Motors after one of its staff apparently sent an email detailing GM’s forthcoming flotation to more than 100 people. The mistake is reported to have cost the bank $10m (£6.2m). Ouch.

 

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