Based on new research, the average worker in the UK would need half a century of income to attain the net worth of the most affluent 10% of the population.
Expanding Financial Divide Through the Years
The analysis examined wealth distribution statistics from the Covid pandemic period and determined that in the pre-financial crisis era, it would have needed 38 years of median full-time earnings to enter the top 10th of the wealth distribution.
A senior economist associated with the report commented: "Financial divides in Britain are presently so substantial that a typical full-time employee saving all their earnings throughout their career would still not be able to achieve the peak of the economic scale."
Quantifying the Wealth Divide
The research found that the gap between the net worth of the typical individual and someone in the richest segment was £1m in 2006-08, but had increased to 1.3 million pounds in real terms by recent times.
The analyst further stated: "These gaps are especially alarming as economic movement in Britain is restricted – those who commence life well-off tend to continue being rich, and vice versa."
Relative Wealth Inequality
Although the financial disparity growing in absolute terms, the share of total wealth in the UK held by the richest households – called "proportional economic disparity" – has been "broadly stable since the 1980s era," per the study.
Over this timeframe, complete net worth in the UK surged from three times the gross domestic product, to almost 7.5 times.
Drivers of Financial Divide
Referred to as "passive" increases, via increasing property values and changes in pension valuations, were the main drivers of the expanding economic divide over the past decade, per the analysis.
These appreciations generally flowed to older, property-owning households, the analysis reveals – intensifying the intergenerational wealth divide.
Age-Based Wealth Disparities
The average wealth gap between individuals aged 30-34 and people aged 60-64 grew by more than 100% in actual value, from £135,000 in pre-financial crisis, to £310k.
Regional Disparities
There were also pronounced geographic differences, with the average level of wealth in the pandemic period amounting to 290 thousand pounds in south-east England, where housing costs have typically increased quickly, as opposed to £110,000 in the NE of England.
COVID Era Consequences
During the pandemic, when numerous employees were covered under the government-supported job retention program, and Covid shutdowns curtailed consumption options, the statistics indicate countless homes were able to save, growing their net worth.
Wealthier families achieved superior outcomes, nevertheless. "The median home in the bottom income bracket saw their available funds grow by only eighty pounds over the pandemic period (from 2019 to 2022), approximately equivalent to the pre-crisis period. On the other hand, the average household in the highest income quintile saw their liquid savings rise by £4,200," the analysis concludes.
