Per fresh research, the median earner in the UK would have to work over five decades of salary to achieve the net worth of the most affluent 10% in the country.
Growing Economic Disparity Across Decades
The analysis analyzed financial assets statistics from the Covid pandemic period and found that during 2006-08, it would have needed 38 years of average worker salary to join the wealthiest decile of the financial hierarchy.
A research lead part of the analysis stated: "Wealth gaps in Britain are currently so significant that a average worker setting aside their entire income throughout their career would still not be able to achieve the peak of the financial hierarchy."
Quantifying the Wealth Divide
The research discovered that the gap between the wealth of the average person and someone in the wealthiest decile was one million pounds in the mid-2000s, but had expanded to £1.3m in actual value by 2020-22.
The researcher added: "These differences are particularly worrying as economic movement in Britain is restricted – individuals who begin life affluent tend to continue being rich, and vice versa."
Relative Wealth Inequality
Despite the wealth gap widening in specific figures, the portion of total wealth in the UK held by the richest households – known as "comparative financial divide" – has been "mostly consistent since the 1980s," according to the research.
Throughout these years, total wealth in the UK increased dramatically from triple the yearly economic output, to approximately 7.5x.
Drivers of Financial Divide
Termed "automatic" appreciation, via increasing property values and adjustments to pension valuations, were the main drivers of the expanding economic divide over the past decade, as stated in the study.
These gains tended to accrue to older, property-owning households, the study demonstrates – worsening the age-based economic gap.
Intergenerational Economic Gaps
The average wealth gap between thirty-somethings and sixty-somethings grew by more than 100% in inflation-adjusted terms, from 135 thousand pounds in pre-financial crisis, to £310,000.
Area-Based Differences
Additionally, there were significant geographic differences, with the median value of wealth in 2020-22 amounting to £290k in south-east England, where housing costs have typically increased quickly, compared with £110,000 in the NE of England.
COVID Era Effects
During the pandemic, when numerous employees were covered under the government-supported job retention program, and Covid shutdowns reduced expenditure possibilities, the information reveals many households were in a position to set aside money, growing their net worth.
Higher-income households fared much better, nevertheless. "The median home in the poorest fifth saw their available funds rise by merely £80 during the COVID years (2019-20 to 2021-22), broadly the same as the 24 months before COVID. In contrast, the median home in the highest income quintile saw their liquid savings rise by £4,200," the analysis concludes.
