The wealth of Britain’s 157 billionaires is now equivalent to more than a fifth of the country’s entire GDP, according to analysis by the Equality Trust – a fivefold increase since 1990.
The charity describes the trend, based on data in this year’s Sunday Times rich list, as Britain’s “ghost GDP”: headline economic growth increasingly disconnected from everyday life.
“Every year politicians point to GDP growth as proof the economy is working. Ghost GDP shows us what that ambition has done to the rest of us because for most of us, it doesn’t feel like the economy is working at all,” said Priya Sahni-Nicholas, the co-executive director of the Equality Trust.
“Ghost GDP and the hollowed out economy it creates, tells you what the rest of us have lost as a direct result.”
Gabriel Zucman, an economist at University of California, Berkeley and the Paris School of Economics, said that while in the postwar decades GDP growth numbers were broadly indicative of how income was growing for most of the population, “today, there is a total disconnect between macroeconomic indicators and the reality of income gains for most people”.
He added: “The upsurge of income and wealth among the super rich – and the accounting of manipulations of multinational companies in Ireland – are distorting macroeconomic numbers.”
When the Sunday Times first published its rich list in 1989, 15 billionaires held a total of £27bn – about 4p in every pound of GDP at the time. Today, the Equality Trust calculates that 157 billionaires hold just under £670bn – more than 22p in every pound.
“Workers have endured the longest pay squeeze in living memory,” said Sahni-Nicholas. “But the richest 50 families now hold more wealth than the poorest 34 million of us combined.”
The trust’s data showed that globally, billionaire wealth had grown from 2.5% to 14.1% of GDP since 1990. Britain’s trajectory – 4% to 22% – is even more extreme.
Simon Pittaway, a senior economist at the Resolution Foundation, said that as total wealth had grown, so had the gaps between the wealthy and the less wealthy. “The growing value of wealth has meant that, even though traditional measures of wealth inequality haven’t risen, the absolute gaps between typical households and those at the top have grown significantly,” he said.
“Today, if someone with typical levels of wealth miraculously saved all of their earnings throughout their entire working life, it would no longer be enough to move them up to the top of Britain’s wealth ladder.”
While the rich list once tracked the top 1,000 wealthiest people in Britain, it now covers just 350 individuals, with entry to the list requiring wealth of at least £350m.
The trust’s analysis found that three billionaires were primarily linked to wealth from property, inheritance and finance in 1990, but today finance accounted for about 30% of all billionaire wealth.
Sahni-Nicholas described this as “rentier capitalism: sitting on appreciating assets, collecting rents, charging fees for moving money around”, adding that it “extracts value from the economy rather than creating it”.
Data from other organisations is often cited as evidence of wider social outcomes of wealth disparity. Last month, the Health Foundation found that healthy life expectancy in Britain had fallen by two years over the past decade to under 61. That places the UK, the sixth-largest economy in the world, second to last among comparable wealthy nations on years lived in good health.
This week, Unicef ranked Britain 24th for child wellbeing, 28th for mental wellbeing, 35th for income inequality and 25th for child poverty among wealthy countries.
