Based on recent study, the typical earner in the UK would have to work over five decades of income to achieve the financial standing of the richest 10% nationwide.
Expanding Wealth Gap Across Decades
This research examined financial assets data from the recent health crisis years and found that in the pre-financial crisis era, it would have taken nearly four decades of average worker salary to join the richest segment of the wealth distribution.
A research lead part of the analysis commented: "Wealth gaps in Britain are currently so significant that a average worker accumulating their complete salary across their entire working life would continue to be incapable to achieve the peak of the financial hierarchy."
Quantifying the Economic Gap
The research found that the gap between the net worth of the median citizen and a person belonging to the wealthiest decile was one million pounds in the mid-2000s, but had expanded to £1.3m in real terms by 2020-22.
The economist further stated: "These disparities are doubly concerning as financial progression in Britain is restricted – people that start life wealthy tend to remain affluent, and conversely applies."
Relative Wealth Inequality
Even with the economic divide growing in specific figures, the percentage of complete net worth in the UK held by the wealthiest families – known as "comparative financial divide" – has been "largely unchanged since the 1980s," according to the analysis.
Throughout these years, complete net worth in the UK rose substantially from triple the annual GDP, to approximately 7.5x.
Contributors of Financial Divide
So-called "unearned" appreciation, through growing real estate costs and changes in retirement fund assessments, were the key contributors of the widening wealth gap over the past decade, as stated in the analysis.
These appreciations typically went to older, property-owning households, the analysis reveals – exacerbating the intergenerational wealth divide.
Generational Economic Gaps
The median economic difference between thirty-somethings and sixty-somethings more than doubled in actual value, from £135k in the mid-2000s, to 310 thousand pounds.
Regional Differences
Furthermore, the study revealed pronounced area-based disparities, with the average level of assets in 2020-22 standing at £290,000 in south-east England, where housing costs have tended to rise rapidly, versus 110 thousand pounds in the northeastern region.
Health Crisis Years Effects
Throughout the COVID period, when numerous employees were protected by the government-supported job retention program, and health crisis restrictions curtailed consumption options, the information reveals countless homes were capable of accumulating, growing their net worth.
More affluent homes fared much better, though. "The average household in the lowest-income quintile saw their cash reserves rise by merely £80 during the COVID years (from 2019 to 2022), broadly the same as the 24 months before COVID. In contrast, the typical family in the highest income quintile saw their liquid savings rise by £4,200," the report finds.
