Britons are '£40,000 poorer' due to credit crunch

The average Briton is £40,000 poorer as a result of the credit crunch, research claimed today.

The combination of falling house prices and stock market slides has wiped around £1.9 trillion off UK household wealth since July 2007, according to PricewaterhouseCoopers.

As a result, it said, the average person had seen the value of their wealth drop by around 28% since the credit crunch first started.

House prices have fallen by 20% since July 2007, reducing collective household wealth by an estimated £800 billion.

At the same time, sharp stock market falls of 40% have wiped out a further £1.1 trillion of people's wealth.

Overall, the total value of UK household wealth has dropped from £6.8 trillion in July 2007 to £4.9 trillion last month.

The group estimates that the fall in wealth during the past 21 months is equivalent to around 130% of gross domestic product.

It warned that, based on research into the link between changes in household wealth and expenditure, the £1.9 trillion drop in the value of people's assets could reduce UK expenditure by around 5% or £45 billion - the equivalent of 3% of GDP.

John Hawksworth, head of macroeconomics at PricewaterhouseCoopers, said: "The estimated loss of wealth of £1.9 trillion would equate to around £40,000 on average per adult in the UK, although clearly these losses will vary considerably across the population.

"The knock-on effect of this level of wealth destruction will result in significantly more belt-tightening and reduced spending by households over the next year and this situation could be exacerbated by expected further falls in house prices over this period."