According to a new analysis by the Equality Trust, the combined wealth of Britain's 157 billionaires now accounts for more than 22% of the country's entire GDP, a fivefold increase since 1990. The charity describes this phenomenon as 'ghost GDP'—headline economic growth that is increasingly detached from the everyday reality for most people.
Ghost GDP and Growing Disparity
Priya Sahni-Nicholas, co-executive director of the Equality Trust, stated: '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.' She added that ghost GDP and the hollowed-out economy it creates reveal what the majority have lost as a direct result of this trend.
Economist Gabriel Zucman from the University of California, Berkeley and the Paris School of Economics noted that while GDP growth once broadly reflected income gains for most people, 'today, there is a total disconnect between macroeconomic indicators and the reality of income gains for most people.' He attributed this to the surge in income and wealth among the super-rich and accounting manipulations by multinational companies.
Historical Context
When the Sunday Times first published its rich list in 1989, 15 billionaires held a total of £27 billion, equivalent to about 4p for every pound of GDP. Today, the Equality Trust calculates that 157 billionaires hold just under £670 billion—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.'
Globally, billionaire wealth has grown from 2.5% to 14.1% of GDP since 1990, but the UK's trajectory from 4% to 22% is even more extreme.
Wealth Inequality in Focus
Simon Pittaway, senior economist at the Resolution Foundation, explained that as total wealth has grown, so have 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 added that even if someone with typical wealth saved all their earnings throughout their working life, it would not be enough to reach the top of Britain's wealth ladder.
The rich list, which once tracked the top 1,000 wealthiest people in Britain, now covers only 350 individuals, with entry requiring at least £350 million in wealth. The trust's analysis found that in 1990, three billionaires were primarily linked to property, inheritance, and finance, but today finance accounts 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,' which 'extracts value from the economy rather than creating it.'
Broader Social Impacts
Data from other organisations highlight the wider consequences of wealth disparity. Last month, the Health Foundation found that healthy life expectancy in Britain fell by two years over the past decade to under 61, placing the UK—the sixth-largest economy in the world—second to last among comparable wealthy nations for 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.
