According to new analysis, the typical worker in the UK would need over five decades of earnings to attain the net worth of the richest 10% in the country.
Growing Financial Divide Through the Years
This research analyzed net worth data covering the Covid pandemic period and found that back in the mid-2000s, it would have taken 38 years of average worker salary to join the richest segment of the financial hierarchy.
A research lead part of the report observed: "Wealth gaps in Britain are presently so substantial that a typical full-time employee setting aside their entire income during their working years would continue to be incapable to attain the highest level of the economic scale."
Measuring the Economic Gap
The research discovered that the difference between the net worth of the median citizen and an individual in the wealthiest decile was £1 million in the mid-2000s, but had expanded to £1.3m in inflation-adjusted terms by recent times.
The analyst added: "These differences are particularly worrying as financial progression in Britain is low – individuals who begin life wealthy tend to stay wealthy, and conversely applies."
Relative Wealth Inequality
Even with the wealth gap widening in absolute terms, the percentage of total wealth in the UK owned by the richest households – called "relative wealth inequality" – has been "largely unchanged since the 1980s," as stated in the research.
Throughout these years, complete net worth in the UK surged from three times the gross domestic product, to almost 7.5 times.
Contributors of Economic Disparity
So-called "passive" increases, via growing real estate costs and changes in superannuation evaluations, were the main drivers of the growing financial disparity since 2010, per the study.
These increases generally flowed to older, property-owning households, the study demonstrates – intensifying the intergenerational wealth divide.
Age-Based Wealth Disparities
The typical financial disparity between thirty-somethings and sixty-somethings increased over twofold in inflation-adjusted terms, from 135 thousand pounds in pre-financial crisis, to £310,000.
Regional Disparities
Furthermore, the study revealed pronounced regional variations, with the median value of assets in recent years standing at 290 thousand pounds in south-east England, where housing costs have generally grown substantially, as opposed to £110k in the north-east.
Health Crisis Years Consequences
Throughout the COVID period, when millions of workers were protected by the government-supported job retention program, and health crisis restrictions limited opportunities for spending, the information reveals numerous families were able to save, growing their net worth.
Higher-income households achieved superior outcomes, nevertheless. "The average household in the bottom income bracket saw their liquid savings rise by merely £80 throughout the health crisis (from 2019 to 2022), roughly identical to the two years pre-pandemic. In contrast, the average household in the highest income quintile saw their available funds rise by £4,200," the analysis concludes.
