Revamping Britain’s balance sheet for growth and prosperity

McKinsey & Company

Research

10 Pages

Although inflation remains above the Bank of England’s target level, the United Kingdom’s recent correction provides an opportunity to consider how best to rebuild the country’s “balance sheet”—its assets and liabilities across corporations, households, and governments.

Source: McKinsey
Source: McKinsey

Key Takeaways

Real Estate: Real estate is the largest component of household wealth, accounting for 60 percent of the total (compared with about 50 percent globally and about 40 percent in the United States), and declined from its peak of 2.8 times GDP in 2020 to 2.1 times GDP in 2025.
Pension Funds: The value of financial assets has seen large adjustments in real terms, especially pension assets (the largest financial asset in British households’ balance sheet), which declined from 2.1 times GDP in 2020 to 1.0 times GDP in 2025.
Wealth Decline: Between 2020 and 2025, the total real wealth of British households decreased by almost £4 trillion due to high inflation; on average, real personal wealth decreased by almost 25%.
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