Based on new research, the median earner in the UK would require over five decades of salary to reach the net worth of the most affluent 10% nationwide.
Expanding Financial Divide Over Time
This research examined financial assets information covering the Covid pandemic period and found that back in the pre-financial crisis era, it would have required nearly four decades of typical employment income to reach the wealthiest decile of the financial hierarchy.
An economic expert associated with the analysis commented: "Wealth gaps in Britain are now so large that a typical full-time employee accumulating their complete salary during their working years would still not be able to reach the top of the wealth ladder."
Quantifying the Financial Disparity
The study found that the gap between the assets of the average person and an individual in the top 10% was £1 million in 2006-08, but had expanded to £1.3m in actual value by 2020-22.
The researcher added: "These differences are particularly worrying as financial progression in Britain is restricted – those who commence life well-off tend to stay wealthy, and conversely applies."
Relative Wealth Inequality
Despite the economic divide widening in absolute terms, the portion of overall assets in the UK possessed by the richest households – termed "relative wealth inequality" – has been "largely unchanged since the 1980s era," according to the analysis.
Throughout these years, total wealth in the UK increased dramatically from three times the yearly economic output, to approximately 7.5x.
Factors of Wealth Inequality
Termed "unearned" increases, by means of increasing property values and changes in pension valuations, were the main drivers of the expanding economic divide over the past decade, according to the report.
These increases tended to accrue to older, property-owning households, the analysis reveals – intensifying the intergenerational wealth divide.
Generational Financial Divides
The average wealth gap between individuals aged 30-34 and those in their early 60s more than doubled in real terms, from £135k in pre-financial crisis, to £310k.
Area-Based Disparities
Furthermore, the study revealed significant geographic differences, with the typical amount of assets in the pandemic period amounting to £290k in south-east England, where housing costs have typically increased quickly, versus £110,000 in the NE of England.
COVID Era Impact
During the pandemic, when millions of workers were supported by the taxpayer-backed furlough scheme, and Covid shutdowns reduced expenditure possibilities, the data shows many households were able to save, enhancing their financial standing.
Higher-income households fared much better, however. "The median home in the lowest-income quintile saw their liquid savings grow by only eighty pounds over the pandemic period (across the pandemic timeframe), roughly identical to the 24 months before COVID. Conversely, the median home in the highest income quintile saw their available funds increase by £4,200," the study reveals.
