British households have experienced the largest decline in wealth among advanced economies since the start of the COVID-19 pandemic, according to analysis by the Swiss investment bank UBS. Over the five-year period ending in 2024, the typical individual’s wealth in the UK fell by more than 20%, marking the steepest contraction among the 37 countries included in the survey.

Adjusted for inflation, median wealth per adult in Britain dropped by approximately £28,500, leaving assets averaging just over £95,500 last year. This decline has placed the UK behind countries such as the Netherlands and Italy in terms of average individual wealth. The erosion of wealth reflects a combination of factors, including soaring inflation and weakening property values, which have compounded economic pressures on households.

Inflation surged dramatically following the pandemic and Russia’s invasion of Ukraine, with the UK experiencing a sharper spike than many other developed nations. Inflation peaked at 11% in October 2022, partly due to the country’s unique energy pricing system that contributed to higher living costs. The inflationary surge eroded the value of assets such as real estate and equities, traditionally major components of household wealth.

In addition to inflationary pressures, the housing market slowdown has also played a role in diminishing wealth. The combination of rising interest rates and affordability challenges has resulted in subdued growth or declines in property values, further weighing on household net worth.

UBS chief economist Paul Donovan highlighted the UK’s comparatively severe inflationary episode, noting it was driven by “a couple of years of quite high inflation” alongside structural factors related to energy pricing. Meanwhile, the tax environment is set to tighten, with the overall tax burden expected to reach its highest level since the Second World War. This increase is partly attributed to a long-standing freeze on income tax thresholds, which effectively raises tax rates as incomes grow with inflation.

The findings underscore economic challenges confronting the UK as political figures prepare for leadership contests. Recent official figures from the Office for National Statistics also indicated that living standards have not improved under Prime Minister Sir Keir Starmer’s administration, with families reporting lower real incomes than prior to his tenure.

Across the five years, British households fared worse than those in not only developed economies but also nations such as Turkey, Bulgaria, Mexico, and Kazakhstan. The combination of inflation shocks, tax pressures, and housing market headwinds has contributed to a notable deterioration in wealth that may influence political and economic debates in the UK moving forward.