Based on new study, the median worker in the UK would require 52 years' worth of earnings to achieve the net worth of the most affluent 10% nationwide.
Expanding Financial Divide Across Decades
The study reviewed wealth distribution data from the Covid pandemic period and determined that during the pre-financial crisis era, it would have taken 38 years' worth of typical employment income to reach the wealthiest decile of the wealth distribution.
A senior economist involved with the report commented: "Wealth gaps in Britain are presently so substantial that a average worker saving all their earnings throughout their career would remain unable to reach the top of the economic scale."
Measuring the Wealth Divide
The analysis revealed that the gap between the assets of the average person and a person belonging to the top 10% was £1m in the pre-crisis period, but had increased to £1.3 million in real terms by the pandemic years.
The researcher continued: "These gaps are doubly concerning as economic movement in Britain is low – those who commence life well-off tend to stay wealthy, and the opposite holds true."
Comparative Financial Divide
Even with the economic divide growing in specific figures, the percentage of total wealth in the UK owned by the wealthiest families – termed "proportional economic disparity" – has been "mostly consistent since the 1980s era," according to the research.
During this period, total wealth in the UK rose substantially from three times the gross domestic product, to approximately 7.5x.
Factors of Financial Divide
So-called "passive" appreciation, via increasing property values and adjustments to retirement fund assessments, were the main drivers of the growing financial disparity over the past decade, per the analysis.
These appreciations typically went to elderly homeowners, the analysis reveals – exacerbating the intergenerational wealth divide.
Generational Financial Divides
The median economic difference between individuals aged 30-34 and sixty-somethings grew by more than 100% in inflation-adjusted terms, from £135k in the mid-2000s, to £310,000.
Area-Based Variations
There were also stark area-based disparities, with the median value of wealth in recent years reaching £290,000 in the southeastern region, where real estate values have generally grown substantially, compared with £110,000 in the NE of England.
Health Crisis Years Consequences
Throughout the COVID period, when numerous employees were covered under the public-funded employment protection, and health crisis restrictions limited opportunities for spending, the statistics indicate many households were capable of accumulating, enhancing their financial standing.
More affluent homes fared much better, nevertheless. "The median home in the bottom income bracket saw their available funds rise by merely £80 throughout the health crisis (across the pandemic timeframe), broadly the same as the two years pre-pandemic. Conversely, the median home in the wealthiest fifth saw their cash reserves increase by £4,200," the analysis concludes.
