Per new research, the median earner in the UK would require half a century of income to attain the net worth of the wealthiest 10% in the country.
Growing Wealth Gap Through the Years
This research reviewed net worth data covering the recent health crisis years and found that back in the pre-financial crisis era, it would have needed 38 years of average worker salary to enter the top 10th of the wealth distribution.
A senior economist part of the report commented: "Wealth gaps in Britain are presently so substantial that a average worker saving all their earnings throughout their career would continue to be incapable to achieve the peak of the financial hierarchy."
Quantifying the Economic Gap
The study revealed that the disparity between the wealth of the median citizen and a person belonging to the wealthiest decile was one million pounds in 2006-08, but had increased to £1.3m in actual value by recent times.
The analyst added: "These gaps are particularly worrying as financial progression in Britain is low – people that start life affluent tend to remain affluent, and vice versa."
Comparative Financial Divide
Although the wealth gap widening in absolute terms, the percentage of complete net worth in the UK possessed by the richest households – called "comparative financial divide" – has been "broadly stable since the 1980s," according to the study.
Over this timeframe, complete net worth in the UK increased dramatically from triple the yearly economic output, to almost 7.5 times.
Factors of Economic Disparity
So-called "automatic" gains, by means of increasing property values and adjustments to retirement fund assessments, were the main drivers of the growing financial disparity since 2010, according to the report.
These appreciations generally flowed to elderly homeowners, the research shows – exacerbating the generational financial disparity.
Intergenerational Wealth Disparities
The typical financial disparity between people in their early 30s and those in their early 60s increased over twofold in actual value, from 135 thousand pounds in pre-financial crisis, to £310k.
Regional Variations
Furthermore, the study revealed pronounced regional variations, with the average level of assets in the pandemic period standing at 290 thousand pounds in the SE of England, where housing costs have generally grown substantially, as opposed to £110,000 in the north-east.
Pandemic Period Impact
During the pandemic, when numerous employees were supported by the public-funded employment protection, and pandemic lockdowns limited opportunities for spending, the data shows numerous families were able to save, growing their net worth.
Higher-income households performed significantly better, however. "The typical family in the bottom income bracket saw their available funds grow by only eighty pounds over the pandemic period (from 2019 to 2022), broadly the same as the pre-crisis period. Conversely, the typical family in the highest income quintile saw their cash reserves grow by 4,200 pounds," the study reveals.
