According to new analysis, the median earner in the UK would need over five decades of salary to achieve the net worth of the wealthiest 10% in the country.
Expanding Financial Divide Across Decades
The study examined net worth statistics covering the Covid pandemic period and determined that back in the pre-financial crisis era, it would have taken 38 years of average worker salary to join the wealthiest decile of the financial hierarchy.
An economic expert associated with the report observed: "Financial divides in Britain are now so large that a regular employee saving all their earnings throughout their career would still not be able to reach the top of the economic scale."
Assessing the Financial Disparity
The research revealed that the disparity between the assets of the typical individual and someone in the wealthiest decile was one million pounds in 2006-08, but had expanded to £1.3m in inflation-adjusted terms by recent times.
The economist continued: "These disparities are doubly concerning as economic movement in Britain is restricted – those who commence life affluent tend to continue being rich, and conversely applies."
Relative Wealth Inequality
Although the wealth gap expanding in specific figures, the portion of total wealth in the UK held by the most affluent homes – termed "comparative financial divide" – has been "largely unchanged since the 1980s," per the analysis.
Throughout these years, overall assets in the UK increased dramatically from three times the gross domestic product, to nearly seven and a half times.
Drivers of Wealth Inequality
So-called "automatic" gains, through increasing property values and changes in pension valuations, were the key contributors of the widening wealth gap over the past decade, according to the analysis.
These appreciations tended to accrue to senior citizens with real estate, the research shows – intensifying the intergenerational wealth divide.
Generational Economic Gaps
The average wealth gap between people in their early 30s and those in their early 60s increased over twofold in actual value, from £135k in 2006-08, to £310k.
Regional Differences
Furthermore, the study revealed pronounced regional variations, with the average level of wealth in recent years amounting to £290,000 in south-east England, where real estate values have generally grown substantially, as opposed to £110k in the northeastern region.
COVID Era Effects
Throughout the COVID period, when countless laborers were supported by the taxpayer-backed furlough scheme, and health crisis restrictions curtailed consumption options, the statistics indicate many households were able to save, increasing their wealth.
Wealthier families fared much better, however. "The median home in the bottom income bracket saw their available funds rise by merely £80 throughout the health crisis (across the pandemic timeframe), approximately equivalent to the 24 months before COVID. Conversely, the median home in the highest income quintile saw their cash reserves increase by £4,200," the report finds.
