A yawning wealth gap between different ethnic groups in the UK has had a “serious impact” on the ability of families to cope financially during the coronavirus crisis, a think tank has warned.

And the divide was likely to persist unless action is taken by the government, the Resolution Foundation said.

Its report found people of black African ethnicity typically had the least assets at just £24,000 family wealth per adult – less than one eighth of that held by a white British household.

In stark contrast, someone of white British ethnicity had £197,000 family wealth per adult on average.

This meant the gulf between the ethnic groups with highest and lowest median household wealth had grown to £173,000, according to the think tank’s report A Gap Which Won’t Close.

Those of Bangladeshi ethnicity typically hold just £31,000 family wealth per adult on average, whilst those with mixed white and black Caribbean ethnicity typically hold £41,800, the report added.

Family wealth includes pension wealth, net property wealth, net financial wealth, physical wealth, and net business assets.

While analysis over a 10-year period from 2006-08 to 2016-18 showed relative wealth gaps had fallen slightly, the disparity between the lowest and highest-wealth ethnic groups – black African and white British – remained significant, down from 81% to 76%.

The research also showed on the eve of the COVID-19 pandemic at least half of 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.

The Resolution Foundation is calling on the government to introduce changes aimed at closing the gap, including wealth tax reform and better targeted help for first-time home buyers.

It said the existing Help to Buy scheme tended to benefit people who already had access to family wealth and said more generous pension tax relief for lower earners was needed.

George Bangham, economist at the Resolution Foundation, said: “There are stark gaps in the amount of wealth held by different ethnic groups in Britain.

“These wealth gaps are having a serious impact on the resilience of different households in the face of income shocks during the COVID-19 crisis, and on the life choices of current and future generations.

“Despite significant progress in closing education and employment gaps between different ethnic groups, these wealth gaps are likely to persist.

“Even high earners will struggle to save their way to being high-wealth, while white British people are much more likely to inherit significant sums than those of other ethnic groups.

“Policy makers need to recognise that wealth gaps may be much harder to close than other differences between ethnic groups, particularly as they are often hardly discussed.

“There is no silver bullet to tackling persistent wealth inequalities but wealth tax reform and better targeting of support for people to access home ownership or save for a pension would help.”

Source: Read Full Article