Based on recent analysis, the typical worker in the UK would need over five decades of earnings to attain the net worth of the wealthiest 10% in the country.
Expanding Financial Divide Over Time
This research examined financial assets statistics including the 2020-22 timeframe and found that during 2006-08, it would have taken nearly four decades of median full-time earnings to enter the wealthiest decile of the economic ladder.
A senior economist part of the study stated: "Financial divides in Britain are now so large that a average worker accumulating their complete salary throughout their career would still not be able to achieve the peak of the financial hierarchy."
Assessing the Wealth Divide
The study revealed that the disparity between the assets of the typical individual and an individual in the top 10% was £1 million in 2006-08, but had widened to £1.3 million in inflation-adjusted terms by 2020-22.
The researcher added: "These gaps are doubly concerning as financial progression in Britain is limited – individuals who begin life affluent tend to stay wealthy, and conversely applies."
Comparative Financial Divide
Although the wealth gap widening in absolute terms, the percentage of overall assets in the UK owned by the richest households – known as "comparative financial divide" – has been "broadly stable since the 1980s," according to the research.
During this period, complete net worth in the UK surged from thrice the annual GDP, to approximately 7.5x.
Drivers of Economic Disparity
So-called "passive" increases, by means of growing real estate costs and variations in superannuation evaluations, were the key contributors of the growing financial disparity since 2010, according to the analysis.
These appreciations tended to accrue to elderly homeowners, the study demonstrates – worsening the age-based economic gap.
Intergenerational Economic Gaps
The median economic difference between individuals aged 30-34 and those in their early 60s increased over twofold in actual value, from 135 thousand pounds in the mid-2000s, to £310,000.
Regional Differences
Furthermore, the study revealed significant area-based disparities, with the median value of net worth in 2020-22 reaching £290k in the SE of England, where property prices have typically increased quickly, as opposed to 110 thousand pounds in the north-east.
Pandemic Period Consequences
During the pandemic, when millions of workers were covered under the government-supported job retention program, and health crisis restrictions limited opportunities for spending, the data shows countless homes were able to save, growing their net worth.
Higher-income households fared much better, nevertheless. "The median home in the bottom income bracket saw their available funds grow by only eighty pounds over the pandemic period (2019-20 to 2021-22), broadly the same as the 24 months before COVID. Conversely, the typical family in the wealthiest fifth saw their liquid savings rise by £4,200," the report finds.
