The 2008 credit crunch saw the average household wealth fall by £45,000 (17%), according to a study by Citigroup, which examined the results of falling house prices, investments in pensions and share values. In total, this has wiped around £1.9 trillion off UK household wealth since July 2007.
Prior to these results, UK household wealth had more than doubled in the two decades leading up to 2007.
Citigroup claims the downturn has dented our so-called ‘wealth effect’, which is the confidence we all have in our spending power based on the perception of our own financial worth. About this matter, Michael Saunders, chief UK economist at Citigroup, said: “The Bank of England used to be sniffy about these “wealth effects” on spending, it is clear that we are seeing an impact. The plunge in wealth is likely to be reflected in further marked weakness in spending by consumers.”
Are you suffering from the credit crunch? Do you believe that your household worth has dropped by £45,000 so far?