According to fresh analysis, the average worker in the UK would need over five decades of salary to reach the wealth level of the richest 10% in the country.
Growing Economic Disparity Through the Years
The analysis reviewed net worth data including the 2020-22 timeframe and determined that during the pre-financial crisis era, it would have taken nearly four decades of average worker salary to reach the wealthiest decile of the wealth distribution.
A senior economist associated with the analysis commented: "Wealth gaps in Britain are now so large that a regular employee saving all their earnings throughout their career would remain unable to achieve the peak of the financial hierarchy."
Measuring the Wealth Divide
The research revealed that the disparity between the wealth of the median citizen and an individual in the top 10% was one million pounds in the mid-2000s, but had increased to £1.3m in inflation-adjusted terms by 2020-22.
The analyst added: "These disparities are doubly concerning as wealth mobility in Britain is low – those who commence life well-off tend to stay wealthy, and the opposite holds true."
Proportional Economic Disparity
Even with the wealth gap expanding in absolute terms, the percentage of total wealth in the UK possessed by the richest households – known as "proportional economic disparity" – has been "largely unchanged since the eighties," per the research.
Throughout these years, total wealth in the UK surged from thrice the gross domestic product, to approximately 7.5x.
Factors of Financial Divide
Termed "passive" gains, via rising house prices and adjustments to retirement fund assessments, were the primary factors of the expanding economic divide since 2010, as stated in the report.
These appreciations typically went to older, property-owning households, the study demonstrates – worsening the generational financial disparity.
Intergenerational Wealth Disparities
The average wealth gap between thirty-somethings and people aged 60-64 increased over twofold in inflation-adjusted terms, from £135,000 in pre-financial crisis, to £310k.
Regional Variations
There were also stark area-based disparities, with the median value of assets in recent years reaching £290k in south-east England, where housing costs have generally grown substantially, as opposed to £110,000 in the NE of England.
COVID Era Consequences
During the pandemic, when millions of workers were supported by the taxpayer-backed furlough scheme, and health crisis restrictions reduced expenditure possibilities, the information reveals many households were capable of accumulating, growing their net worth.
Higher-income households performed significantly better, though. "The typical family in the poorest fifth saw their liquid savings grow by only eighty pounds 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 rise by £4,200," the report finds.
