Per new study, the typical employee in the UK would have to work over five decades of earnings to achieve the net worth of the wealthiest 10% in the country.
Expanding Wealth Gap Through the Years
The study examined net worth data covering the recent health crisis years and found that in the pre-financial crisis era, it would have needed 38 years of typical employment income to join the wealthiest decile of the wealth distribution.
An economic expert involved with the study stated: "Financial divides in Britain are now so large that a average worker setting aside their entire income across their entire working life would remain unable to achieve the peak of the economic scale."
Quantifying the Wealth Divide
The analysis revealed that the difference between the wealth of the average person and someone in the richest segment was £1m in 2006-08, but had widened to £1.3m in real terms by the pandemic years.
The economist continued: "These gaps are doubly concerning as economic movement in Britain is restricted – individuals who begin life affluent tend to remain affluent, and conversely applies."
Comparative Financial Divide
Despite the financial disparity expanding in specific figures, the percentage of complete net worth in the UK possessed by the richest households – termed "relative wealth inequality" – has been "mostly consistent since the 1980s era," as stated in the research.
During this period, total wealth in the UK surged from triple the annual GDP, to almost 7.5 times.
Drivers of Economic Disparity
So-called "passive" increases, through rising house prices and adjustments to superannuation evaluations, were the key contributors of the expanding economic divide from 2010 onward, as stated in the report.
These increases tended to accrue to elderly homeowners, the analysis reveals – exacerbating the intergenerational wealth divide.
Intergenerational Economic Gaps
The typical financial disparity between individuals aged 30-34 and people aged 60-64 increased over twofold in real terms, from 135 thousand pounds in 2006-08, to 310 thousand pounds.
Geographic Variations
Additionally, there were stark regional variations, with the average level of assets in the pandemic period standing at £290,000 in the southeastern region, where property prices have typically increased quickly, compared with £110k in the NE of England.
COVID Era Effects
During the pandemic, when numerous employees were supported by the government-supported job retention program, and health crisis restrictions reduced expenditure possibilities, the information reveals many households were able to save, enhancing their financial standing.
Wealthier families performed significantly better, nevertheless. "The median home in the lowest-income quintile saw their cash reserves increase by just £80 during the COVID years (2019-20 to 2021-22), approximately equivalent to the two years pre-pandemic. In contrast, the median home in the wealthiest fifth saw their available funds rise by £4,200," the report finds.
