A stark and widening divide in household wealth between different ethnic communities in Britain has been revealed in a major new study. Research from the London School of Economics (LSE) shows that while individuals from white British and Indian backgrounds have seen their median wealth grow substantially since 2012, the wealth of those from Pakistani ethnicity has sharply declined.
The Widening Gulf in Median Wealth
The report, titled “The Ethnic Wealth Divide in the UK: Mapping Disparities Across Time, Age and Immigrant Generations”, was authored by Eleni Karagiannaki, a research fellow at LSE. It analysed data from the UK Household Longitudinal Survey across 24-month periods from 2012/2014 to 2021/2023. The findings paint a concerning picture of entrenched and growing inequality.
The Indian and ‘Asian Other’ ethnic groups experienced the largest financial gains. For the Indian community, median wealth skyrocketed by an impressive £93,000 over the period studied. The white British and ‘white Other’ groups also registered substantial increases. In stark contrast, median wealth among individuals from the Pakistani ethnic group dropped sharply. Meanwhile, Black African, Black Caribbean, and Bangladeshi groups were found to have “almost no accumulated household wealth throughout” the entire decade.
Savings, Home Ownership, and Economic Mobility
The disparities extend deeply into financial security and asset ownership. Adults from Pakistani, Bangladeshi, Black Caribbean, and Black African backgrounds reported significantly lower savings compared to their white British, Other Asian, and Indian counterparts. Alarmingly, more than 50% of adults in the Bangladeshi, Pakistani, and Black African groups had no savings at all.
Home and investment ownership gaps have also widened. In 2012/14, white British, Indian, and Asian Other groups already had higher ownership rates. By 2021/23, these groups increased their holdings further, while Bangladeshi, Black Caribbean, and Pakistani groups saw sharp declines, particularly in home ownership.
The report also highlights divergent paths in economic mobility. Individuals from white British, white other, and Indian backgrounds are more likely to move up from the bottom wealth quartile. Conversely, Pakistani and Black African individuals are more vulnerable to falling from the top quartile, indicating less stable financial footing.
Root Causes and the Indian Advantage
The study points to underlying factors driving these gaps. It notes that Indian and white British groups typically experience steadier income growth across their lifetimes, enabling earlier accumulation of assets like property and investments. In contrast, Pakistani and Bangladeshi groups exhibit the widest income gaps relative to the white British group compared to any other ethnic minority.
An interesting intra-community finding is that UK-born adults from the Indian group “have a clear wealth advantage” over both non-UK-born Indians and the white British group. This suggests that factors like education, career opportunities for second-generation immigrants, and cultural emphasis on asset building are playing a significant role in the community's financial success.
The LSE report serves as a crucial data point, underscoring that despite progress in some areas, deep economic inequalities along ethnic lines persist and are intensifying in modern Britain. It calls for targeted policy interventions to address the specific barriers faced by the most disadvantaged groups.
