According to fresh research, the median worker in the UK would need over five decades of income to achieve the net worth of the wealthiest 10% of the population.
Expanding Wealth Gap Over Time
The study reviewed net worth statistics covering the recent health crisis years and determined that in the pre-financial crisis era, it would have required nearly four decades of median full-time earnings to join the wealthiest decile of the wealth distribution.
An economic expert part of the study stated: "Financial divides in Britain are presently so substantial that a average worker saving all their earnings throughout their career would remain unable to achieve the peak of the wealth ladder."
Assessing the Wealth Divide
The research found that the disparity between the assets of the typical individual and an individual in the richest segment was £1m in the pre-crisis period, but had expanded to 1.3 million pounds in inflation-adjusted terms by 2020-22.
The economist further stated: "These disparities are especially alarming as financial progression in Britain is limited – those who commence life well-off tend to continue being rich, and conversely applies."
Proportional Economic Disparity
Although the economic divide growing in specific figures, the percentage of total wealth in the UK held by the richest households – called "relative wealth inequality" – has been "broadly stable since the 1980s," as stated in the study.
During this period, complete net worth in the UK surged from triple the annual GDP, to almost 7.5 times.
Factors of Financial Divide
So-called "automatic" increases, by means of growing real estate costs and changes in superannuation evaluations, were the key contributors of the widening wealth gap over the past decade, per the study.
These increases generally flowed to elderly homeowners, the research shows – intensifying the intergenerational wealth divide.
Intergenerational Financial Divides
The typical financial disparity between thirty-somethings and those in their early 60s increased over twofold in inflation-adjusted terms, from £135k in 2006-08, to £310k.
Area-Based Differences
Furthermore, the study revealed pronounced area-based disparities, with the average level of assets in recent years reaching 290 thousand pounds in the SE of England, where housing costs have tended to rise rapidly, as opposed to £110,000 in the north-east.
Pandemic Period Consequences
During the pandemic, when numerous employees were covered under the government-supported job retention program, and pandemic lockdowns reduced expenditure possibilities, the statistics indicate numerous families were able to save, growing their net worth.
More affluent homes performed significantly better, though. "The median home in the bottom income bracket saw their liquid savings rise by merely £80 during the COVID years (2019-20 to 2021-22), roughly identical to the two years pre-pandemic. Conversely, the average household in the highest income quintile saw their liquid savings increase by £4,200," the report finds.
