Per new analysis, the average earner in the UK would have to work over five decades of income to attain the net worth of the wealthiest 10% in the country.
Growing Financial Divide Through the Years
The analysis reviewed financial assets information covering the recent health crisis years and determined that back in 2006-08, it would have needed 38 years of average worker salary to enter the richest segment of the financial hierarchy.
A senior economist associated with the report stated: "Financial divides in Britain are currently so significant that a typical full-time employee saving all their earnings throughout their career would continue to be incapable to reach the top of the wealth ladder."
Measuring the Financial Disparity
The research found that the disparity between the net worth of the average person and an individual in the wealthiest decile was £1 million in the pre-crisis period, but had expanded to £1.3 million in real terms by 2020-22.
The economist further stated: "These differences are particularly worrying as economic movement in Britain is low – individuals who begin life affluent tend to remain affluent, and vice versa."
Relative Wealth Inequality
Although the financial disparity growing in specific figures, the share of complete net worth in the UK possessed by the wealthiest families – known as "proportional economic disparity" – has been "mostly consistent since the 1980s," per the analysis.
During this period, complete net worth in the UK rose substantially from three times the gross domestic product, to approximately 7.5x.
Contributors of Wealth Inequality
So-called "unearned" increases, via increasing property values and adjustments to pension valuations, were the key contributors of the widening wealth gap from 2010 onward, per the report.
These gains typically went to older, property-owning households, the research shows – worsening the generational financial disparity.
Age-Based Financial Divides
The median economic difference between people in their early 30s and people aged 60-64 grew by more than 100% in inflation-adjusted terms, from £135,000 in pre-financial crisis, to £310,000.
Regional Differences
Additionally, there were pronounced area-based disparities, with the typical amount of assets in the pandemic period reaching 290 thousand pounds in south-east England, where real estate values have generally grown substantially, versus £110k in the northeastern region.
Health Crisis Years Impact
Throughout the COVID period, when numerous employees were supported by the taxpayer-backed furlough scheme, and health crisis restrictions limited opportunities for spending, the data shows numerous families were in a position to set aside money, enhancing their financial standing.
More affluent homes performed significantly better, however. "The average household in the lowest-income quintile saw their cash reserves increase by just £80 throughout the health crisis (across the pandemic timeframe), roughly identical to the 24 months before COVID. On the other hand, the typical family in the highest income quintile saw their cash reserves grow by 4,200 pounds," the analysis concludes.
