Wealth gaps between ethnic groups likely to persist

People of Black African ethnicity typically hold the lowest wealth, finds Resolution Foundation

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.

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).