According to fresh research, the average employee in the UK would have to work half a century of income to reach the net worth of the richest 10% in the country.
Growing Economic Disparity Through the Years
This research reviewed financial assets statistics from the recent health crisis years and discovered that during the pre-financial crisis era, it would have required nearly four decades of median full-time earnings to reach the wealthiest decile of the wealth distribution.
An economic expert part of the study observed: "Wealth gaps in Britain are presently so substantial that a average worker saving all their earnings during their working years would remain unable to attain the highest level of the wealth ladder."
Measuring the Wealth Divide
The analysis discovered that the difference between the assets of the median citizen and a person belonging to the richest segment was £1 million in 2006-08, but had expanded to £1.3m in real terms by 2020-22.
The analyst continued: "These differences are particularly worrying as wealth mobility in Britain is limited – people that start life affluent tend to remain affluent, and conversely applies."
Proportional Economic Disparity
Although the economic divide widening in actual numbers, the share of overall assets in the UK owned by the wealthiest families – known as "proportional economic disparity" – has been "broadly stable since the 1980s era," as stated in the analysis.
Throughout these years, total wealth in the UK rose substantially from triple the gross domestic product, to approximately 7.5x.
Contributors of Financial Divide
So-called "passive" appreciation, by means of rising house prices and changes in pension valuations, were the main drivers of the growing financial disparity from 2010 onward, as stated in the study.
These increases generally flowed to older, property-owning households, the study demonstrates – exacerbating the intergenerational wealth divide.
Intergenerational Wealth Disparities
The average wealth gap between people in their early 30s and sixty-somethings grew by more than 100% in real terms, from £135,000 in 2006-08, to £310,000.
Geographic Differences
There were also stark regional variations, with the median value of assets in recent years standing at £290k in the SE of England, where housing costs have typically increased quickly, versus £110k in the NE of England.
Pandemic Period Consequences
During the pandemic, when millions of workers were covered under the public-funded employment protection, and pandemic lockdowns reduced expenditure possibilities, the data shows many households were capable of accumulating, growing their net worth.
Wealthier families achieved superior outcomes, though. "The typical family in the poorest fifth saw their cash reserves increase by just £80 throughout the health crisis (across the pandemic timeframe), roughly identical to the pre-crisis period. In contrast, the median home in the top income bracket saw their available funds rise by £4,200," the report finds.
