Based on new study, the average worker in the UK would require half a century of earnings to achieve the net worth of the most affluent 10% of the population.
Growing Economic Disparity Over Time
This research analyzed financial assets statistics including the 2020-22 timeframe and determined that back in the mid-2000s, it would have required nearly four decades of average worker salary to join the top 10th of the economic ladder.
A research lead associated with the analysis commented: "Economic disparities in Britain are now so large that a regular employee saving all their earnings throughout their career would continue to be incapable to attain the highest level of the financial hierarchy."
Quantifying the Financial Disparity
The research revealed that the gap between the net worth of the average person and a person belonging to the wealthiest decile was £1m in 2006-08, but had expanded to £1.3m in real terms by 2020-22.
The analyst added: "These gaps are doubly concerning as wealth mobility in Britain is restricted – those who commence life well-off tend to continue being rich, and vice versa."
Relative Wealth Inequality
Even with the economic divide widening in absolute terms, the share of total wealth in the UK owned by the most affluent homes – known as "relative wealth inequality" – has been "broadly stable since the 1980s," per the study.
During this period, overall assets in the UK surged from three times the gross domestic product, to approximately 7.5x.
Contributors of Financial Divide
Referred to as "unearned" increases, via increasing property values and adjustments to pension valuations, were the primary factors of the growing financial disparity over the past decade, as stated in the report.
These gains tended to accrue to elderly homeowners, the analysis reveals – exacerbating the intergenerational wealth divide.
Intergenerational Financial Divides
The median economic difference between people in their early 30s and those in their early 60s more than doubled in actual value, from £135,000 in pre-financial crisis, to £310,000.
Area-Based Variations
Additionally, there were stark regional variations, with the average level of wealth in 2020-22 standing at 290 thousand pounds in the southeastern region, where housing costs have tended to rise rapidly, compared with £110k in the north-east.
Pandemic Period Consequences
During the pandemic, when numerous employees were covered under the government-supported job retention program, and pandemic lockdowns limited opportunities for spending, the information reveals countless homes were in a position to set aside money, growing their net worth.
Wealthier families achieved superior outcomes, though. "The average household 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 pre-crisis period. Conversely, the median home in the highest income quintile saw their cash reserves rise by £4,200," the report finds.
