According to recent analysis, the average worker in the UK would need half a century of salary to achieve the wealth level of the wealthiest 10% nationwide.
Widening Wealth Gap Over Time
The study reviewed financial assets statistics including the Covid pandemic period and determined that back in the pre-financial crisis era, it would have required nearly four decades of average worker salary to enter the richest segment of the financial hierarchy.
A research lead part of the report stated: "Wealth gaps in Britain are now so large that a average worker saving all their earnings across their entire working life would still not be able to attain the highest level of the financial hierarchy."
Quantifying the Wealth Divide
The analysis discovered that the disparity between the wealth of the average person and someone in the wealthiest decile was £1m in the mid-2000s, but had widened to £1.3 million in actual value by 2020-22.
The researcher added: "These disparities are especially alarming as economic movement in Britain is limited – individuals who begin life affluent tend to continue being rich, and vice versa."
Relative Wealth Inequality
Even with the economic divide expanding in actual numbers, the portion of complete net worth in the UK held by the wealthiest families – called "comparative financial divide" – has been "mostly consistent since the eighties," as stated in the study.
Throughout these years, total wealth in the UK rose substantially from three times the yearly economic output, to almost 7.5 times.
Drivers of Economic Disparity
So-called "unearned" increases, through rising house prices and changes in pension valuations, were the primary factors of the widening wealth gap since 2010, as stated in the study.
These appreciations tended to accrue to elderly homeowners, the research shows – intensifying the intergenerational wealth divide.
Age-Based Economic Gaps
The median economic difference between people in their early 30s and people aged 60-64 grew by more than 100% in real terms, from 135 thousand pounds in the mid-2000s, to £310k.
Geographic Variations
There were also significant regional variations, with the average level of net worth in 2020-22 amounting to £290,000 in south-east England, where housing costs have typically increased quickly, compared with £110,000 in the north-east.
Pandemic Period Impact
During the pandemic, when numerous employees were covered under the government-supported job retention program, and Covid shutdowns curtailed consumption options, the data shows countless homes were able to save, growing their net worth.
Higher-income households performed significantly better, nevertheless. "The median home in the bottom income bracket saw their liquid savings grow by only eighty pounds over the pandemic period (across the pandemic timeframe), roughly identical to the pre-crisis period. On the other hand, the average household in the highest income quintile saw their cash reserves increase by £4,200," the study reveals.
