According to new study, the average worker in the UK would require over five decades of income to reach the net worth of the most affluent 10% of the population.
Widening Financial Divide Over Time
The analysis analyzed wealth distribution statistics including the 2020-22 timeframe and found that back in the pre-financial crisis era, it would have taken nearly four decades of average worker salary to enter the wealthiest decile of the economic ladder.
A senior economist involved with the analysis stated: "Economic disparities in Britain are presently so substantial that a regular employee saving all their earnings across their entire working life would still not be able to reach the top of the wealth ladder."
Assessing the Economic Gap
The analysis revealed that the disparity between the assets of the median citizen and an individual in the wealthiest decile was £1 million in 2006-08, but had widened to £1.3m in inflation-adjusted terms by 2020-22.
The researcher continued: "These gaps are doubly concerning as wealth mobility in Britain is limited – those who commence life well-off tend to remain affluent, and the opposite holds true."
Proportional Economic Disparity
Even with the wealth gap expanding in absolute terms, the portion of total wealth in the UK possessed by the wealthiest families – termed "proportional economic disparity" – has been "broadly stable since the 1980s era," according to the analysis.
Over this timeframe, complete net worth in the UK rose substantially from thrice the annual GDP, to approximately 7.5x.
Contributors of Financial Divide
Termed "automatic" appreciation, through increasing property values and changes in retirement fund assessments, were the key contributors of the widening wealth gap over the past decade, as stated in the analysis.
These increases tended to accrue to senior citizens with real estate, the research shows – exacerbating the generational financial disparity.
Generational Financial Divides
The average wealth gap between people in their early 30s and people aged 60-64 more than doubled in inflation-adjusted terms, from 135 thousand pounds in the mid-2000s, to £310k.
Area-Based Disparities
There were also pronounced regional variations, with the median value of assets in 2020-22 standing at £290,000 in the southeastern region, where real estate values have generally grown substantially, compared with 110 thousand pounds in the NE of England.
Health Crisis Years Impact
Amid the health crisis, when numerous employees were protected by the taxpayer-backed furlough scheme, and health crisis restrictions reduced expenditure possibilities, the data shows many households were able to save, increasing their wealth.
Wealthier families performed significantly better, though. "The median home in the lowest-income quintile saw their cash reserves grow by only eighty pounds during the COVID years (2019-20 to 2021-22), approximately equivalent to the pre-crisis period. Conversely, the median home in the wealthiest fifth saw their liquid savings rise by £4,200," the report finds.
