Per recent analysis, the average earner in the UK would require over five decades of earnings to achieve the net worth of the most affluent 10% nationwide.
Expanding Economic Disparity Over Time
This research reviewed wealth distribution statistics including the 2020-22 timeframe and determined that in the pre-financial crisis era, it would have taken 38 years' worth of average worker salary to enter the top 10th of the wealth distribution.
A senior economist involved with the analysis observed: "Wealth gaps in Britain are now so large that a regular employee setting aside their entire income throughout their career would continue to be incapable to attain the highest level of the economic scale."
Quantifying the Wealth Divide
The study revealed that the disparity between the wealth of the average person and a person belonging to the wealthiest decile was £1m in the pre-crisis period, but had expanded to 1.3 million pounds in actual value by recent times.
The economist further stated: "These disparities are particularly worrying as wealth mobility in Britain is restricted – those who commence life affluent tend to stay wealthy, and conversely applies."
Relative Wealth Inequality
Even with the economic divide expanding in specific figures, the portion of complete net worth in the UK owned by the most affluent homes – termed "proportional economic disparity" – has been "broadly stable since the 1980s," as stated in the study.
During this period, complete net worth in the UK increased dramatically from three times the annual GDP, to approximately 7.5x.
Contributors of Financial Divide
Referred to as "unearned" gains, through increasing property values and changes in pension valuations, were the key contributors of the widening wealth gap over the past decade, per the report.
These gains typically went to elderly homeowners, the analysis reveals – exacerbating the intergenerational wealth divide.
Generational Economic Gaps
The median economic difference between thirty-somethings and those in their early 60s grew by more than 100% in inflation-adjusted terms, from £135k in the mid-2000s, to £310k.
Geographic Variations
There were also significant regional variations, with the average level of assets in the pandemic period amounting to 290 thousand pounds in the southeastern region, where property prices have tended to rise rapidly, as opposed to £110k in the northeastern region.
COVID Era Consequences
During the pandemic, when millions of workers were supported by the public-funded employment protection, and Covid shutdowns reduced expenditure possibilities, the data shows numerous families were able to save, enhancing their financial standing.
Wealthier families performed significantly better, however. "The average household in the bottom income bracket saw their available funds increase by just £80 over the pandemic period (across the pandemic timeframe), broadly the same as the two years pre-pandemic. Conversely, the average household in the top income bracket saw their available funds rise by £4,200," the report finds.
