According to new research, the typical earner in the UK would require half a century of income to reach the wealth level of the wealthiest 10% in the country.
Widening Financial Divide Through the Years
The study examined financial assets data covering the Covid pandemic period and determined that in the mid-2000s, it would have taken nearly four decades of average worker salary to enter the richest segment of the wealth distribution.
A senior economist part of the report observed: "Economic disparities in Britain are currently so significant that a average worker saving all their earnings during their working years would still not be able to attain the highest level of the wealth ladder."
Measuring the Economic Gap
The study discovered that the gap between the assets of the average person and a person belonging to the wealthiest decile was one million pounds in the mid-2000s, but had increased to £1.3m in actual value by the pandemic years.
The analyst continued: "These gaps are especially alarming as economic movement in Britain is restricted – people that start life well-off tend to remain affluent, and vice versa."
Relative Wealth Inequality
Although the wealth gap growing in actual numbers, the percentage of complete net worth in the UK held by the richest households – known as "relative wealth inequality" – has been "broadly stable since the eighties," according to the analysis.
Throughout these years, complete net worth in the UK increased dramatically from triple the yearly economic output, to approximately 7.5x.
Factors of Wealth Inequality
So-called "automatic" appreciation, via growing real estate costs and adjustments to pension valuations, were the key contributors of the expanding economic divide over the past decade, as stated in the study.
These gains typically went to older, property-owning households, the research shows – intensifying the intergenerational wealth divide.
Age-Based Wealth Disparities
The average wealth gap between thirty-somethings and those in their early 60s grew by more than 100% in real terms, from £135k in the mid-2000s, to £310,000.
Regional Differences
Furthermore, the study revealed stark area-based disparities, with the typical amount of wealth in 2020-22 amounting to £290k in the SE of England, where real estate values have typically increased quickly, as opposed to £110k in the northeastern region.
COVID Era Impact
Throughout the COVID period, when numerous employees were protected by the government-supported job retention program, and pandemic lockdowns reduced expenditure possibilities, the data shows many households were able to save, growing their net worth.
Higher-income households achieved superior outcomes, though. "The median home in the lowest-income quintile saw their available funds increase by just £80 over the pandemic period (from 2019 to 2022), roughly identical to the 24 months before COVID. In contrast, the median home in the top income bracket saw their cash reserves grow by 4,200 pounds," the study reveals.
