According to fresh research, the average earner in the UK would have to work half a century of salary to attain the financial standing of the wealthiest 10% nationwide.
Expanding Wealth Gap Over Time
The study reviewed net worth information covering the 2020-22 timeframe and found that in 2006-08, it would have needed 38 years of average worker salary to reach the wealthiest decile of the wealth distribution.
An economic expert part of the report observed: "Economic disparities in Britain are now so large that a typical full-time employee setting aside their entire income during their working years would still not be able to reach the top of the financial hierarchy."
Quantifying the Economic Gap
The study revealed that the disparity between the net worth of the median citizen and a person belonging to the top 10% was one million pounds in the mid-2000s, 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 restricted – people that start life affluent tend to continue being rich, and the opposite holds true."
Proportional Economic Disparity
Despite the economic divide growing in specific figures, the share of overall assets in the UK possessed by the richest households – known as "relative wealth inequality" – has been "mostly consistent since the eighties," according to the research.
Throughout these years, total wealth in the UK surged from three times the gross domestic product, to approximately 7.5x.
Drivers of Financial Divide
Termed "automatic" gains, through growing real estate costs and adjustments to pension valuations, were the key contributors of the growing financial disparity since 2010, as stated in the analysis.
These gains typically went to older, property-owning households, the study demonstrates – exacerbating the age-based economic gap.
Intergenerational Wealth Disparities
The average wealth gap between people in their early 30s and people aged 60-64 grew by more than 100% in inflation-adjusted terms, from £135,000 in pre-financial crisis, to £310k.
Area-Based Variations
Furthermore, the study revealed stark area-based disparities, with the median value of wealth in the pandemic period amounting to £290,000 in the SE of England, where housing costs have tended to rise rapidly, compared with £110,000 in the northeastern region.
Pandemic Period Impact
During the pandemic, when millions of workers were covered under the public-funded employment protection, and pandemic lockdowns curtailed consumption options, the statistics indicate numerous families were capable of accumulating, growing their net worth.
Higher-income households fared much better, though. "The average household in the lowest-income quintile saw their cash reserves rise by merely £80 over the pandemic period (2019-20 to 2021-22), broadly the same as the 24 months before COVID. Conversely, the average household in the highest income quintile saw their liquid savings grow by 4,200 pounds," the analysis concludes.
