According to new analysis, the average worker in the UK would require over five decades of salary to achieve the net worth of the most affluent 10% nationwide.
Expanding Wealth Gap Across Decades
This research examined wealth distribution statistics covering the Covid pandemic period and determined that during 2006-08, it would have needed nearly four decades of median full-time earnings to join the wealthiest decile of the financial hierarchy.
A research lead involved with the study observed: "Economic disparities in Britain are presently so substantial that a regular employee saving all their earnings during their working years would remain unable to achieve the peak of the economic scale."
Measuring the Wealth Divide
The analysis found that the disparity between the wealth of the average person and someone in the richest segment was £1 million in the mid-2000s, but had widened to £1.3 million in actual value by 2020-22.
The economist continued: "These differences are especially alarming as wealth mobility in Britain is low – individuals who begin life affluent tend to remain affluent, and conversely applies."
Comparative Financial Divide
Despite the wealth gap widening in absolute terms, the portion of total wealth in the UK held by the most affluent homes – called "comparative financial divide" – has been "broadly stable since the 1980s," according to the analysis.
During this period, total wealth in the UK increased dramatically from three times the gross domestic product, to approximately 7.5x.
Drivers of Wealth Inequality
Referred to as "unearned" gains, through increasing property values and adjustments to pension valuations, were the main drivers of the expanding economic divide over the past decade, as stated in the report.
These increases tended to accrue to senior citizens with real estate, the research shows – exacerbating the intergenerational wealth divide.
Age-Based Financial Divides
The typical financial disparity between people in their early 30s and sixty-somethings more than doubled in real terms, from £135k in the mid-2000s, to 310 thousand pounds.
Regional Variations
Additionally, there were pronounced regional variations, with the average level of assets in 2020-22 amounting to £290,000 in south-east England, where real estate values have generally grown substantially, versus £110k in the northeastern region.
COVID Era Effects
Amid the health crisis, when millions of workers were supported by the public-funded employment protection, and health crisis restrictions curtailed consumption options, the statistics indicate many households were able to save, increasing their wealth.
More affluent homes fared much better, however. "The average household in the bottom income bracket saw their available funds grow by only eighty pounds during the COVID years (2019-20 to 2021-22), approximately equivalent to the pre-crisis period. On the other hand, the median home in the top income bracket saw their liquid savings grow by 4,200 pounds," the analysis concludes.
