Wealth differences between ethnic groups in the UK have widened significantly since 2012/14, says new research by Eleni Karagiannaki. 

While overall wealth has grown, the gains have been unevenly distributed across ethnic groups according to the report: 

The Ethnic Wealth Divide in the UK: Mapping Disparities Across Time, Age and Immigrant Generations, by Eleni Karagiannaki. CASE Report 165

The analysis shows that while individuals from White British and Indian ethnic groups experienced substantial increases in median wealth, in contrast, wealth among individuals from the Pakistani ethnic group dropped sharply. Black African, Black Caribbean, and Bangladeshi ethnic groups remain with almost no accumulated household wealth.

Across all ethnic groups, including White British, wealth gains were disproportionately higher among those at the top, widening inequality not only between but also within groups. This resulted in very different wealth mobility patterns. Upward mobility is far less common among individuals from Black African and Black Caribbean ethnic groups, and some groups face greater risk of downward mobility from the top, such as people from Pakistani and Black African ethnic groups.

The report finds that homeownership and asset ownership — rather than the amount saved — have driven much of the widening wealth gap. Wealth-poor ethnic groups started the period studied with low ownership of high-return assets and, in many cases, saw sharp declines in homeownership*. This left them unable to benefit from rising property prices, while those who had managed to buy their houses earlier, and hold on to them—such as individuals from White British and Indian ethnic groups—amplified their wealth advantage.

The analysis of wealth over individuals’ lifetimes shows that gaps start small in early adulthood but widen dramatically by midlife. UK-born individuals from the Indian ethnic group outperform both first-generation peers and White British counterparts, while UK-born individuals from the Pakistani, Bangladeshi, and Black Caribbean ethnic groups show limited progress.

Dr Eleni Karagiannaki, from LSE’s Centre for Analysis of Social Exclusion, said: “Taken together, my findings underscore the cumulative disadvantages experienced by many individuals from ethnic minority backgrounds. Disparities in income early in life which intensify during middle age, combined with limited savings—largely due to lower earnings and competing financial pressures, and to a lesser extent differences in saving habits—and delayed access to homeownership, lead to marked differences over the course of people’s lives. This highlights the importance of putting policies in place that boost earnings, expand saving capacity, and improve access to asset markets. These measures will help close the wealth accumulation gap and increase the financial resilience of individuals from the poorest groups in society.”

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*Buying a home is becoming harder because of high prices, large deposits, and expensive or hard-to-get mortgages. These challenges hit people from poorer ethnic minority groups the hardest, making existing inequalities worse.

Notes to Editors: 

This report draws on evidence from Understanding Society, The UK Household Longitudinal Study the largest household panel survey in the UK tracking thousands of households over time.

The research was funded by the British Academy under the BA Innovation Fellowship Scheme (project number IF2324\240028).