According to recent research, the typical earner in the UK would have to work half a century of earnings to reach the net worth of the most affluent 10% nationwide.
Widening Financial Divide Over Time
The study examined net worth statistics covering the Covid pandemic period and determined that back in 2006-08, it would have required nearly four decades of average worker salary to reach the richest segment of the economic ladder.
A senior economist associated with the report stated: "Wealth gaps in Britain are presently so substantial that a typical full-time employee accumulating their complete salary across their entire working life would continue to be incapable to attain the highest level of the financial hierarchy."
Quantifying the Wealth Divide
The research discovered that the difference between the net worth of the average person and an individual in the wealthiest decile was £1 million in the mid-2000s, but had increased to £1.3 million in real terms by the pandemic years.
The researcher added: "These disparities are particularly worrying as wealth mobility in Britain is limited – people that start life affluent tend to stay wealthy, and conversely applies."
Proportional Economic Disparity
Despite the wealth gap widening in specific figures, the percentage of complete net worth in the UK possessed by the richest households – called "comparative financial divide" – has been "mostly consistent since the 1980s," per the study.
Over this timeframe, total wealth in the UK increased dramatically from triple the gross domestic product, to nearly seven and a half times.
Factors of Economic Disparity
So-called "automatic" gains, via increasing property values and changes in retirement fund assessments, were the primary factors of the expanding economic divide from 2010 onward, as stated in the report.
These increases typically went to senior citizens with real estate, the study demonstrates – intensifying the intergenerational wealth divide.
Age-Based Wealth Disparities
The typical financial disparity between individuals aged 30-34 and those in their early 60s increased over twofold in inflation-adjusted terms, from £135k in pre-financial crisis, to £310k.
Regional Variations
Furthermore, the study revealed stark geographic differences, with the typical amount of wealth in the pandemic period reaching £290k in south-east England, where real estate values have typically increased quickly, versus £110k in the north-east.
COVID Era Effects
Throughout the COVID period, when numerous employees were protected by the public-funded employment protection, and Covid shutdowns limited opportunities for spending, the data shows many households were in a position to set aside money, increasing their wealth.
More affluent homes performed significantly better, however. "The typical family in the bottom income bracket saw their cash reserves grow by only eighty pounds during the COVID years (across the pandemic timeframe), roughly identical to the 24 months before COVID. Conversely, the median home in the top income bracket saw their liquid savings rise by £4,200," the study reveals.
