Significant gaps in the amount of wealth held by different ethnic groups in Britain are likely to persist.
These gaps have had a serious impact on the financial resilience of households during the COVID-19 crisis, according to a new report.
Independent British think tank Resolution Foundation found people of Black African ethnicity typically hold the lowest wealth, a median figure of £24,000 ($32,169) family wealth per adult.
This amounts to less than one eighth of the typical wealth held by a person of White British ethnicity, which is £197,000 family wealth per adult.
Those of Bangladeshi ethnicity typically hold just £31,000 family wealth per adult, a median figure, while those with Mixed White and Black Caribbean ethnicity typically hold £41,800.
Looking at how wealth has changed over the past decade, the report found that relative wealth gaps have fallen slightly.
However, absolute gaps in wealth between different groups rose across this period, as household wealth increased. The gap between the ethnic groups with highest and lowest median household wealth (White British and Black African households respectively) has grown to £173,000.
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“These significant wealth gaps between households have been brought to the fore during the pandemic,” the report said.
The Foundation’s analysis shows that, on the eve of the pandemic, at least half Black African, Bangladeshi and Black Caribbean ethnicity households in the UK had less than £1,000 in family savings to act as a buffer in case of a fall in their income.
Looking beyond the pandemic, the report said such large wealth gaps are likely to persist, even as some employment and education gaps between ethnic groups have reduced.
The combination of rising wealth but stagnant earnings makes it difficult for even higher earners to save their way to being high wealth.
Inheritance will also play a part in prolonging these gaps. The report showed that over the past two years, the average person of White British ethnicity inherited a total of £3,068 from friends and family – almost 50% more than an average person from the next highest-inheriting ethnic group, people of Indian ethnicity (£1,958).
The average person of Black Caribbean ethnicity inherited £778, while the those of Black African, Chinese, Bangladeshi or Pakistani ethnicity typically inherited nothing.
The Resolution Foundation said “such persistent wealth gaps must be considered by policymakers, and points to the need for wealth tax reform, help for first-time buyers that is more progressively targeted than recent schemes such as Help to Buy, which largely benefitted young people who already had access to family wealth, and more generous tax pension tax relief for lower earners.”
George Bangham, economist at the Resolution Foundation, added that “policy makers need to recognise that wealth gaps may be much harder to close than other differences between ethnic groups, particularly as they are often hardly discussed.
He said “There is no silver bullet to tackling persistent wealth inequalities but wealth tax reform and better targeting of support for people to access home ownership or save for a pension would help.”
Meanwhile, a report from last month said that the UK’s wealth disparity is widening as a result of the pandemic,
A COVID-19 Social Study conducted by University College London found that the regions most hard hit with the widening financial gap are those living in the North East of England.
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