Based on new analysis, the median worker in the UK would require half a century of income to attain the net worth of the most affluent 10% of the population.
Growing Wealth Gap Through the Years
This research analyzed net worth statistics from the recent health crisis years and found that in the pre-financial crisis era, it would have required nearly four decades of average worker salary to enter the richest segment of the wealth distribution.
A research lead part of the study stated: "Financial divides in Britain are currently so significant that a regular employee saving all their earnings across their entire working life would remain unable to attain the highest level of the financial hierarchy."
Quantifying the Economic Gap
The research revealed that the gap between the assets of the median citizen and a person belonging to the wealthiest decile was £1m in the pre-crisis period, but had expanded to 1.3 million pounds in actual value by recent times.
The economist continued: "These differences are especially alarming as economic movement in Britain is low – those who commence life affluent tend to continue being rich, and the opposite holds true."
Comparative Financial Divide
Even with the economic divide growing in actual numbers, the share of overall assets in the UK owned by the wealthiest families – termed "comparative financial divide" – has been "largely unchanged since the eighties," according to the study.
Over this timeframe, complete net worth in the UK rose substantially from thrice the gross domestic product, to approximately 7.5x.
Drivers of Wealth Inequality
So-called "unearned" gains, via rising house prices and variations in retirement fund assessments, were the key contributors of the expanding economic divide since 2010, according to the analysis.
These gains generally flowed to elderly homeowners, the research shows – intensifying the intergenerational wealth divide.
Age-Based Wealth Disparities
The median economic difference between thirty-somethings and people aged 60-64 grew by more than 100% in actual value, from £135,000 in 2006-08, to £310k.
Geographic Differences
Furthermore, the study revealed significant regional variations, with the average level of net worth in the pandemic period reaching £290k in south-east England, where housing costs have tended to rise rapidly, versus £110k in the northeastern region.
Pandemic Period Impact
Amid the health crisis, when numerous employees were protected by the public-funded employment protection, and pandemic lockdowns curtailed consumption options, the statistics indicate numerous families were capable of accumulating, enhancing their financial standing.
More affluent homes fared much better, though. "The average household in the bottom income bracket saw their cash reserves grow by only eighty pounds throughout the health crisis (from 2019 to 2022), broadly the same as the pre-crisis period. On the other hand, the typical family in the highest income quintile saw their liquid savings grow by 4,200 pounds," the study reveals.
