What’s going on?
A report out on Monday showed Brits saved an extra $1.3 trillion during the pandemic, with the haves yet again out-having the have-nots.
What does this mean?
Household wealth – calculated by subtracting a household’s debts from its assets – has jumped by around 6% in the UK since before the pandemic, with the average family now $11,000 better off. Emphasis on the average family: the richest 10% have $70,000 more in their pockets, while the poorest 30% are up just $120.
There are a couple of reasons why that gap’s so big. For one thing, the increase was mostly thanks to a rise in the prices of stocks and real estate, which are owned in more significant quantities by wealthier people. And for another, the poorest – who work more in the lockdown-impaired services industry – were hit much harder by the effects of the pandemic.
Why should I care?
For markets: You can’t rely on the rich.
The Bank of England is expecting these savings to drive a surge in consumer spending, with British shoppers forecast to spend around 10% of the money they’ve been holding onto. But there could be trouble ahead: if the rich are the only ones with money to burn, the country’s economic recovery might not be as strong as the central bank’s anticipating – which would fit with last week’s disappointing data.
For you personally: Buy into the new normal.
With the last of the UK’s lockdown measures being lifted, workers are finally starting to head back to London: data out on Monday showed the first uptick in the city’s real estate rental prices since the pandemic began. But you don’t need to own an office block to benefit: you could just invest in real estate investment trusts, which give you exposure to multiple properties all in one tidy package.