March 15, 2009

Brits lose 17 percent of their wealth

The average wealth of households in Britain fell by 17 percent last year, the biggest drop in at least 40 years, economists say.

Britons lost wealth mostly through sliding housing prices and a plunging stock market, The Times of London reported Sunday.

The newspaper said the figures mean the average British household has lost more than $60,000 of wealth. Individuals have lost about $27,000.

For the study, analysts looked at the value of housing and the investments people have in pensions and other assets.

The drop in wealth is clearly the biggest for 40 years and possibly for much longer, said Michael Saunders, chief UK economist at Citigroup, who prepared the figures. Although the Bank of England used to be somewhat sniffy about these 'wealth effects' on spending, it is clear that we are seeing an impact.

Last week, it was reported that households in the United States lost about 18 percent of their wealth last year.

The newspaper said the American housing crash and falling stock prices wiped out $11.2 trillion in worth.

The plunge in wealth is likely to be reflected in further marked weakness in spending by consumers, Saunders noted.