According to recent research, the median earner in the UK would have to work over five decades of salary to achieve the wealth level of the richest 10% of the population.
Widening Financial Divide Across Decades
This research examined financial assets statistics including the Covid pandemic period and discovered that during the pre-financial crisis era, it would have needed 38 years' worth of average worker salary to join the top 10th of the economic ladder.
A research lead associated with the study observed: "Wealth gaps in Britain are currently so significant that a regular employee setting aside their entire income during their working years would still not be able to reach the top of the financial hierarchy."
Measuring the Financial Disparity
The study found that the gap between the net worth of the typical individual and someone in the top 10% was one million pounds in the pre-crisis period, but had expanded to £1.3m in actual value by the pandemic years.
The researcher added: "These differences are especially alarming as wealth mobility in Britain is low – those who commence life wealthy tend to remain affluent, and vice versa."
Relative Wealth Inequality
Even with the wealth gap expanding in specific figures, the portion of complete net worth in the UK owned by the wealthiest families – called "proportional economic disparity" – has been "mostly consistent since the 1980s," as stated in the study.
Over this timeframe, total wealth in the UK increased dramatically from triple the gross domestic product, to approximately 7.5x.
Drivers of Financial Divide
Termed "automatic" gains, via increasing property values and changes in pension valuations, were the main drivers of the expanding economic divide since 2010, as stated in the study.
These increases typically went to elderly homeowners, the analysis reveals – worsening the age-based economic gap.
Age-Based Economic Gaps
The median economic difference between individuals aged 30-34 and those in their early 60s grew by more than 100% in actual value, from £135k in the mid-2000s, to £310k.
Area-Based Differences
Additionally, there were significant regional variations, with the typical amount of assets in 2020-22 reaching £290k in the southeastern region, where property prices have generally grown substantially, as opposed to 110 thousand pounds in the NE of England.
Pandemic Period Consequences
During the pandemic, when millions of workers were supported by the taxpayer-backed furlough scheme, and pandemic lockdowns limited opportunities for spending, the statistics indicate numerous families were capable of accumulating, growing their net worth.
More affluent homes fared much better, however. "The typical family in the bottom income bracket saw their cash reserves rise by merely £80 during the COVID years (2019-20 to 2021-22), approximately equivalent to the two years pre-pandemic. On the other hand, the average household in the wealthiest fifth saw their available funds grow by 4,200 pounds," the report finds.
