Based on recent research, the typical earner in the UK would require half a century of income to reach the net worth of the wealthiest 10% of the population.
Growing Wealth Gap Through the Years
The study examined net worth data covering the recent health crisis years and determined that back in the pre-financial crisis era, it would have required 38 years' worth of average worker salary to enter the wealthiest decile of the economic ladder.
A research lead involved with the report observed: "Wealth gaps in Britain are now so large that a average worker setting aside their entire income throughout their career would remain unable to achieve the peak of the financial hierarchy."
Assessing the Financial Disparity
The analysis found that the gap between the wealth of the median citizen and someone in the richest segment was one million pounds in the pre-crisis period, but had widened to 1.3 million pounds in actual value by recent times.
The analyst added: "These gaps are doubly concerning as economic movement in Britain is restricted – those who commence life well-off tend to continue being rich, and conversely applies."
Comparative Financial Divide
Even with the economic divide widening in absolute terms, the portion of complete net worth in the UK owned by the most affluent homes – called "comparative financial divide" – has been "broadly stable since the 1980s era," per the research.
Throughout these years, complete net worth in the UK rose substantially from three times the gross domestic product, to approximately 7.5x.
Contributors of Financial Divide
So-called "passive" increases, via rising house prices and variations in retirement fund assessments, were the key contributors of the growing financial disparity from 2010 onward, as stated in the report.
These increases generally flowed to older, property-owning households, the analysis reveals – worsening the generational financial disparity.
Intergenerational Economic Gaps
The typical financial disparity between people in their early 30s and people aged 60-64 grew by more than 100% in inflation-adjusted terms, from 135 thousand pounds in 2006-08, to 310 thousand pounds.
Geographic Disparities
Additionally, there were pronounced regional variations, with the average level of net worth in 2020-22 standing at £290k in the southeastern region, where property prices have generally grown substantially, as opposed to £110k in the northeastern region.
Pandemic Period Consequences
Amid the health crisis, when countless laborers were covered under the public-funded employment protection, and health crisis restrictions curtailed consumption options, the information reveals many households were in a position to set aside money, growing their net worth.
More affluent homes achieved superior outcomes, however. "The average household in the poorest fifth saw their available funds grow by only eighty pounds during the COVID years (across the pandemic timeframe), broadly the same as the pre-crisis period. In contrast, the median home in the highest income quintile saw their cash reserves rise by £4,200," the report finds.
