According to fresh analysis, the median employee in the UK would require half a century of earnings to reach the wealth level of the richest 10% of the population.
Widening Financial Divide Through the Years
The study analyzed net worth data including the recent health crisis years and found that back in the pre-financial crisis era, it would have needed 38 years' worth of average worker salary to reach the richest segment of the financial hierarchy.
A research lead part of the study stated: "Financial divides in Britain are now so large that a average worker accumulating their complete salary during their working years would continue to be incapable to reach the top of the financial hierarchy."
Assessing the Economic Gap
The study found that the difference between the net worth of the typical individual and an individual in the top 10% was one million pounds in the mid-2000s, but had increased to £1.3m in real terms by recent times.
The researcher continued: "These gaps are doubly concerning as wealth mobility in Britain is restricted – people that start life wealthy tend to remain affluent, and conversely applies."
Relative Wealth Inequality
Even with the wealth gap expanding in absolute terms, the share of overall assets in the UK owned by the most affluent homes – called "relative wealth inequality" – has been "mostly consistent since the 1980s era," as stated in the analysis.
Over this timeframe, complete net worth in the UK rose substantially from triple the annual GDP, to almost 7.5 times.
Contributors of Wealth Inequality
Referred to as "automatic" gains, via growing real estate costs and changes in retirement fund assessments, were the key contributors of the expanding economic divide from 2010 onward, as stated in the study.
These appreciations generally flowed to senior citizens with real estate, the study demonstrates – exacerbating the generational financial disparity.
Intergenerational Wealth Disparities
The typical financial disparity between individuals aged 30-34 and people aged 60-64 increased over twofold in real terms, from £135,000 in the mid-2000s, to £310k.
Area-Based Disparities
There were also stark geographic differences, with the average level of wealth in recent years reaching £290,000 in the southeastern region, where real estate values have generally grown substantially, as opposed to £110k in the north-east.
Pandemic Period Impact
Amid the health crisis, when millions of workers were covered under the public-funded employment protection, and health crisis restrictions curtailed consumption options, the data shows countless homes were in a position to set aside money, enhancing their financial standing.
Higher-income households fared much better, though. "The median home in the lowest-income quintile saw their cash reserves increase by just £80 throughout the health crisis (from 2019 to 2022), broadly the same as the two years pre-pandemic. On the other hand, the average household in the wealthiest fifth saw their liquid savings rise by £4,200," the analysis concludes.
