The Office of National Statistics (ONS) has reported that Britain became a richer economy last year with a 3.3% increase in the nation’s net worth, while slowly recovering from the deep recession of 2008-09.
According to the ONS, property has been a major contributor to the country’s wealth, accounting for £4.1trillion of net worth, following a threefold increase over the past 20 years. ONS arrived at the figure of £6.8 trillion, which is an average of £110,000 for every man, woman and child in the UK, on the assets accumulated by households, businesses and the state. Assets held by life insurance companies and pension funds accounted for £2.2 trillion of net worth and money held in currency and bank deposits a further £1.3 trillion, ONS said.
Heavy borrowing to fund the budget deficit has affected the state’s wealth, ONS reported. Stating figures, ONS said that central government net worth was £763 billion at the end of 2011, a 40% deterioration during the course of the year. Britain’s net wealth fell in the two years from 2007 to 2009 as the financial crisis turned into the longest and deepest recession since the second world war.
ONS reported that the labour market also remained fragile, unemployment rose to 8.1% in 2011 up from 7.8% in 2010. This contributed towards low consumer confidence and led to reluctance to spend money. Over half of household wealth can be attributed to dwellings; house prices stagnated during 2011 after a mild recovery in 2010 from a pronounced fall during the financial crisis.
Despite falling interest rates making mortgages more affordable, access to finance was limited, consumers tried to reduce levels of previous debt and confidence was subdued, resulting in a shortfall in the demand for housing.