UK households have suffered a sharp fall in wealth as global turmoil stokes a rise in the cost of living, new figures show.
Average wealth as estimated by households has fallen by 17.5pc from £126,482 in 2025 to £104,329 this year according to a poll by St James’s Place.
The survey of 6,000 people showed that the drop was seen across income groups. It was the biggest fall measured since the study began four years ago.
Rising costs of essentials such as food as well as the lack of a salary increase, higher rent and higher tax bills were among the challenges hitting people’s finances, according to the poll.
It comes at a time when prices are being driven higher by the war in Iran and the Bank of England is under pressure to put up interest rates in order to tackle the consequent increase in inflation.
The Bank has warned that a prolonged war could mean inflation surging above six per cent meaning it may have to hike interest rates up to six times.
The poll measured wealth including savings, investments and physical possessions
Mortgage rates offered by lenders have already risen sharply as they anticipate a higher path of rates than previously expected.
The poll is likely to be seen by the government’s critics as further evidence of the dismal picture for living standards under Labour – days after voters demonstrated their fury with the party as it suffered disastrous local election results.
War in the Middle East has made the economic outlook worse but UK inflation was already the highest in the G7, and growth sluggish, even before the conflict broke out.
The poll from St James’s Place was conducted between March and April before the latest political turmoil in Westminster which has further rocked financial markets.
Alexandra Loydon, group advice director at the wealth manager, said: ‘Many households are feeling worse off, with living costs and heightened global uncertainty weighing on confidence and, understandably, affecting how people feel about their finances and the future.
‘People are naturally feeling a bit more cautious and unsettled and insecure.
‘There’s been a sustained period of sustained financial pressures for people.
‘Every income level is showing a drop and showing that people are feeling less resilient.’
Loydon said the research showed those who put a plan in place to manage their finances were better placed to build up their wealth or stay resilient ‘regardless of their income or circumstances’.
The poll measured perceptions of wealth including savings, investments and physical possessions but excluding property and pensions.
It suggests average household wealth is now lower than when the survey began in 2022 when it was estimated at £111,797.
The survey showed twice as many people believe their finances have worsened compared to last year compared to those who said they have improved.
