Per new research, the average worker in the UK would have to work over five decades of earnings to reach the net worth of the most affluent 10% of the population.
Widening Financial Divide Across Decades
The study analyzed net worth statistics covering the 2020-22 timeframe and determined that back in the pre-financial crisis era, it would have required 38 years' worth of average worker salary to reach the top 10th of the wealth distribution.
A senior economist part of the study commented: "Financial divides in Britain are now so large that a average worker accumulating their complete salary throughout their career would remain unable to reach the top of the financial hierarchy."
Quantifying the Financial Disparity
The research discovered that the disparity between the assets of the typical individual and a person belonging to the wealthiest decile was one million pounds in 2006-08, but had expanded to £1.3m in actual value by recent times.
The analyst further stated: "These disparities are particularly worrying as financial progression in Britain is limited – those who commence life affluent tend to stay wealthy, and conversely applies."
Relative Wealth Inequality
Despite the wealth gap growing in absolute terms, the percentage of total wealth in the UK held by the wealthiest families – known as "relative wealth inequality" – has been "broadly stable since the 1980s era," per the research.
Throughout these years, total wealth in the UK surged from thrice the gross domestic product, to approximately 7.5x.
Contributors of Economic Disparity
Referred to as "unearned" increases, by means of rising house prices and variations in pension valuations, were the primary factors of the expanding economic divide from 2010 onward, according to the study.
These increases tended to accrue to older, property-owning households, the analysis reveals – worsening the generational financial disparity.
Intergenerational Economic Gaps
The typical financial disparity between thirty-somethings and those in their early 60s grew by more than 100% in actual value, from £135k in pre-financial crisis, to £310k.
Area-Based Differences
Additionally, there were pronounced area-based disparities, with the typical amount of assets in recent years amounting to £290,000 in south-east England, where property prices have tended to rise rapidly, versus £110,000 in the NE of England.
Pandemic Period Consequences
During the pandemic, when countless laborers were supported by the public-funded employment protection, and health crisis restrictions limited opportunities for spending, the statistics indicate numerous families were in a position to set aside money, enhancing their financial standing.
Higher-income households achieved superior outcomes, though. "The typical family in the bottom income bracket saw their cash reserves increase by just £80 throughout the health crisis (across the pandemic timeframe), approximately equivalent to the 24 months before COVID. Conversely, the average household in the wealthiest fifth saw their liquid savings grow by 4,200 pounds," the study reveals.
