Per fresh study, the typical worker in the UK would need half a century of salary to attain the net worth of the richest 10% in the country.
Widening Financial Divide Across Decades
This research analyzed wealth distribution data from the Covid pandemic period and discovered that back in the mid-2000s, it would have required nearly four decades of average worker salary to reach the wealthiest decile of the financial hierarchy.
A senior economist associated with the report observed: "Wealth gaps in Britain are currently so significant that a average worker setting aside their entire income across their entire working life would continue to be incapable to attain the highest level of the wealth ladder."
Assessing the Wealth Divide
The study discovered that the gap between the assets of the typical individual and an individual in the top 10% was £1 million in the mid-2000s, but had increased to £1.3m in real terms by the pandemic years.
The researcher further stated: "These disparities are particularly worrying as wealth mobility in Britain is restricted – individuals who begin life affluent tend to continue being rich, and vice versa."
Proportional Economic Disparity
Even with the financial disparity expanding in absolute terms, the percentage of complete net worth in the UK held by the richest households – termed "relative wealth inequality" – has been "largely unchanged since the 1980s," as stated in the research.
During this period, overall assets in the UK increased dramatically from thrice the annual GDP, to nearly seven and a half times.
Drivers of Financial Divide
So-called "passive" increases, via growing real estate costs and changes in pension valuations, were the primary factors of the expanding economic divide since 2010, as stated in the report.
These gains tended to accrue to elderly homeowners, the analysis reveals – exacerbating the generational financial disparity.
Intergenerational Wealth Disparities
The average wealth gap between individuals aged 30-34 and those in their early 60s grew by more than 100% in real terms, from £135,000 in pre-financial crisis, to 310 thousand pounds.
Area-Based Differences
Furthermore, the study revealed pronounced area-based disparities, with the median value of assets in 2020-22 standing at £290k in the SE of England, where housing costs have tended to rise rapidly, versus 110 thousand pounds in the northeastern region.
Health Crisis Years Effects
During the pandemic, when millions of workers were covered under the taxpayer-backed furlough scheme, and Covid shutdowns limited opportunities for spending, the information reveals countless homes were in a position to set aside money, growing their net worth.
Higher-income households fared much better, however. "The median home in the poorest fifth saw their cash reserves rise by merely £80 over the pandemic period (across the pandemic timeframe), broadly the same as the two years pre-pandemic. Conversely, the average household in the top income bracket saw their liquid savings increase by £4,200," the analysis concludes.
