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<figure class="align-center zoomable"> <a aria-label="Zoomable image" href="https://images.theconversation.com/files/735276/original/file-20260512-57-66xl7u.png?ixlib=rb-4.1.1&q=45&auto=format&w=1000&fit=clip"><img alt="Chart showing net debt (excluding public sector banks) as a % of GDP." src="https://images.theconversation.com/files/735276/original/file-20260512-57-66xl7u.png?ixlib=rb-4.1.1&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/735276/original/file-20260512-57-66xl7u.png?ixlib=rb-4.1.1&q=45&auto=format&w=600&h=217&fit=crop&dpr=1 600w, https://images.theconversation.com/files/735276/original/file-20260512-57-66xl7u.png?ixlib=rb-4.1.1&q=30&auto=format&w=600&h=217&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/735276/original/file-20260512-57-66xl7u.png?ixlib=rb-4.1.1&q=15&auto=format&w=600&h=217&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/735276/original/file-20260512-57-66xl7u.png?ixlib=rb-4.1.1&q=45&auto=format&w=754&h=273&fit=crop&dpr=1 754w, https://images.theconversation.com/files/735276/original/file-20260512-57-66xl7u.png?ixlib=rb-4.1.1&q=30&auto=format&w=754&h=273&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/735276/original/file-20260512-57-66xl7u.png?ixlib=rb-4.1.1&q=15&auto=format&w=754&h=273&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a> <figcaption> This excludes public sector banks. <a class="source" href="https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/timeseries/hf6x/pusf">Office of National Statistics</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a> </figcaption> </figure>

Both <a href="https://obr.uk/forecasts-in-depth/brief-guides-and-explainers/public-finances/">government spending and tax revenues</a> are now at 80-year highs as a percentage of GDP, with spending making up 45% of the total economy, and taxes 40%. This has severely limited the government’s scope to improve public services and invest in future growth, or to tackle the cost of living crisis.

Economic growth has also become even <a href="https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/regionaleconomicactivitybygrossdomesticproductuk/1998to2023">more uneven</a>. The gap in GDP per capita between the south-east and the rest of the country has continued to grow, with London’s average income now two and half times that of the poorest region – the north-east of England. The relentless rise in <a href="https://www.nationwide.co.uk/media/hpi/charts/">house prices</a> has driven both regional and generational inequality.

The outlook

Though many countries were hit by the global financial crisis, Britain’s oversized financial sector meant it was both <a href="https://ifs.org.uk/publications/conservatives-and-economy-2010-24">hit harder</a> and recovered more slowly. It has fallen further behind its main G7 rivals both in long-term productivity growth and the level of real incomes.

With its economy more dependent on foreign trade, it is also more vulnerable to disruptions to the international economy, such as the Trump-era tariff wars and the effects of the Iran war on oil and gas output. The IMF <a href="https://www.imf.org/en/publications/weo/issues/2026/04/14/world-economic-%20outlook-april-2026">has projected</a> that despite a small upgrade the UK will only grow by 1.0% in 2026, dragged down by weaker international trade and higher oil prices.

In the 1970s, Britain was regarded as the “sick man of Europe”, falling behind while its continental rivals surged ahead. With the world more divided than ever, and with the emergence of new economic superpowers like China, the UK’s task in recovering its position will be even more difficult than the challenges it faced then.

Haves and have nots

Young people are finding it increasingly difficult to afford <a href="https://www.ons.gov.uk/peoplepopulationandcommunity/housing/bulletins/housingaffordabilityinenglandandwales/2025">to own a home</a> or find secure jobs. More working age adults, including those with low-paid jobs, are <a href="https://www.gov.uk/government/statistics/dwp-benefit-statistics-february-2026/benefit-combinations-official-statistics-to-august-2025">receiving benefits</a>, while <a href="https://www.bbc.co.uk/news/articles/c62gzl2yl24o">over a million people</a> aged 16-24 are not in education, employment or training.

<a href="https://wwwn.ons.gov.uk/employmbourmarket/peoplenotinwork/unwhie%20mployment/timeseries/mgsx">Overall unemployment</a> is little changed, having fallen during the Tony Blair years, but now it is young people who are particularly hard hit as firms are not hiring new recruits. Meanwhile pensioners have benefited from the <a href="https://en.wikipedia.org/wiki/State_Pension_(United_Kingdom)">“triple lock”</a>, which guarantees that state pensions grow generously each year.

<figure class="align-center zoomable"> <a aria-label="Zoomable image" href="https://images.theconversation.com/files/745882/original/file-20260703-57-wp9gif.jpg?ixlib=rb-4.1.1&q=45&auto=format&w=1000&fit=clip"><img alt="Two older people out walking in the countryside" src="https://images.theconversation.com/files/745882/original/file-20260703-57-wp9gif.jpg?ixlib=rb-4.1.1&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/745882/original/file-20260703-57-wp9gif.jpg?ixlib=rb-4.1.1&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/745882/original/file-20260703-57-wp9gif.jpg?ixlib=rb-4.1.1&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/745882/original/file-20260703-57-wp9gif.jpg?ixlib=rb-4.1.1&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/745882/original/file-20260703-57-wp9gif.jpg?ixlib=rb-4.1.1&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/745882/original/file-20260703-57-wp9gif.jpg?ixlib=rb-4.1.1&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/745882/original/file-20260703-57-wp9gif.jpg?ixlib=rb-4.1.1&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a> <figcaption> Pensioners have done well in recent years. <a class="source" href="https://www.shutterstock.com/image-photo/senior-couple-hiking-mountain-countryside-outdoor-2518458885?trackingId=a5667651-54af-4ad5-9867-731519c2ce56&listId=searchResults">Rawpixel.com</a> </figcaption> </figure>

Whereas poverty has decreased for pensioners, there has been a sharp increase in working age poverty and child poverty, including many who are working but still below the poverty line. The huge rise in house prices and the larger number of substantial private pensions being received by the baby boomer generation has meant that wealth is much more unequally distributed than 25 years ago.

<h2>Wealth</h2>

Mike Savage, professorial research fellow, International Inequalities Institute, London School of Economics

Britain has a far more equal distribution of wealth assets than in the early 20th century. Home-ownership, pension funds and various other financial investments have seen wealth shared much more widely among the middle and upper classes.

On the other hand, many have been left behind. The <a href="https://www.resolutionfoundation.org/app/uploads/2025/10/Before-the-fall.pdf">Resolution Foundation</a> reckons that household wealth is now nearly 7.5 times GDP, up from around three times GDP in the mid-1980s, and the wealthiest have benefitted disproportionately.

<a href="https://www.lse.ac.uk/International-Inequalities/Assets/Documents/Why-wealth-inequality-matters-PRINT97.pdf">There has been</a> a stark rise in the “wealth gap” between the top 10% of wealth holders and sizeable numbers of the British population with little or no wealth. This is despite the fact that the share of total wealth taken by the top 10% has changed relatively little over the same period.

You don’t have to look all the way down the social strata to see what has happened. The <a href="https://www.resolutionfoundation.org/publications/before-the-fall/">Resolution Foundation</a> calculates that the gap between the average family wealth per adult for the wealthiest 10% and those in the middle (the fifth decile) reached £1.3 million in 2020-22. This is up from £1 million in 2006-08 (once inflation is stripped out).

How wealth breaks down

<a href="https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/totalwealthingreatbritain/april2020tomarch2022">Total household wealth</a> in Great Britain reached £17 trillion in 2020-22, according to the wealth and assets survey of the Office for National Statistics. Some £5.5 trillion (32%) was held in property (mostly through owner-occupied housing) and £8.2 trillion (48%) in pension funds.

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