According to recent analysis, the typical worker in the UK would need over five decades of income to reach the net worth of the most affluent 10% of the population.
Growing Financial Divide Through the Years
The study analyzed net worth statistics covering the recent health crisis years and determined that during the mid-2000s, it would have required 38 years of typical employment income to join the top 10th of the financial hierarchy.
A senior economist involved with the analysis stated: "Economic disparities in Britain are currently so significant that a regular employee saving all their earnings across their entire working life would still not be able to achieve the peak of the wealth ladder."
Quantifying the Wealth Divide
The study discovered that the difference between the net worth of the average person and someone in the top 10% was one million pounds in the mid-2000s, but had increased to £1.3 million in real terms by the pandemic years.
The researcher continued: "These disparities are particularly worrying as economic movement in Britain is limited – people that start life affluent tend to remain affluent, and the opposite holds true."
Relative Wealth Inequality
Despite the economic divide expanding in absolute terms, the portion of overall assets in the UK owned by the richest households – known as "comparative financial divide" – has been "largely unchanged since the 1980s," according to the research.
During this period, total wealth in the UK surged from three times the yearly economic output, to nearly seven and a half times.
Drivers of Financial Divide
Referred to as "passive" increases, by means of increasing property values and changes in retirement fund assessments, were the primary factors of the widening wealth gap from 2010 onward, as stated in the report.
These gains tended to accrue to older, property-owning households, the study demonstrates – exacerbating the intergenerational wealth divide.
Generational Wealth Disparities
The median economic difference between people in their early 30s and sixty-somethings grew by more than 100% in actual value, from £135,000 in 2006-08, to £310,000.
Geographic Disparities
Furthermore, the study revealed significant area-based disparities, with the typical amount of assets in 2020-22 standing at £290,000 in the SE of England, where real estate values have generally grown substantially, compared with 110 thousand pounds in the NE of England.
Pandemic Period Effects
During the pandemic, when numerous employees were supported by the public-funded employment protection, and pandemic lockdowns curtailed consumption options, the statistics indicate numerous families were capable of accumulating, growing their net worth.
More affluent homes fared much better, however. "The average household in the bottom income bracket saw their available funds grow by only eighty pounds throughout the health crisis (2019-20 to 2021-22), broadly the same as the two years pre-pandemic. In contrast, the median home in the highest income quintile saw their liquid savings grow by 4,200 pounds," the report finds.
