Per new research, the median worker in the UK would need 52 years' worth of earnings to achieve the wealth level of the most affluent 10% in the country.
Growing Financial Divide Across Decades
This research analyzed net worth data from the Covid pandemic period and discovered that back in the mid-2000s, it would have taken nearly four decades of average worker salary to enter the richest segment of the economic ladder.
An economic expert involved with the report stated: "Financial divides in Britain are now so large that a average worker accumulating their complete salary during their working years would still not be able to achieve the peak of the financial hierarchy."
Quantifying the Financial Disparity
The study found that the gap between the net worth of the average person and someone in the richest segment was one million pounds in 2006-08, but had increased to 1.3 million pounds in real terms by 2020-22.
The analyst further stated: "These differences are doubly concerning as financial progression in Britain is restricted – people that start life well-off tend to remain affluent, and vice versa."
Relative Wealth Inequality
Even with the economic divide expanding in absolute terms, the percentage of total wealth in the UK owned by the wealthiest families – termed "relative wealth inequality" – has been "broadly stable since the eighties," per the research.
Throughout these years, overall assets in the UK increased dramatically from triple the yearly economic output, to nearly seven and a half times.
Drivers of Wealth Inequality
So-called "automatic" increases, via increasing property values and adjustments to retirement fund assessments, were the key contributors of the widening wealth gap over the past decade, as stated in the study.
These gains typically went to elderly homeowners, the analysis reveals – worsening the generational financial disparity.
Generational Wealth Disparities
The average wealth gap between thirty-somethings and those in their early 60s increased over twofold in actual value, from 135 thousand pounds in pre-financial crisis, to £310k.
Geographic Differences
Furthermore, the study revealed stark geographic differences, with the typical amount of net worth in recent years standing at £290,000 in south-east England, where housing costs have typically increased quickly, versus 110 thousand pounds in the north-east.
Pandemic Period Impact
Amid the health crisis, when numerous employees were covered under the government-supported job retention program, and health crisis restrictions reduced expenditure possibilities, the data shows many households were capable of accumulating, increasing their wealth.
Higher-income households performed significantly better, however. "The average household in the lowest-income quintile saw their liquid savings increase by just £80 over the pandemic period (2019-20 to 2021-22), roughly identical to the pre-crisis period. Conversely, the average household in the highest income quintile saw their cash reserves increase by £4,200," the report finds.
