According to recent analysis, the average worker in the UK would require over five decades of salary to achieve the net worth of the wealthiest 10% of the population.
Expanding Financial Divide Over Time
The study reviewed net worth data covering the 2020-22 timeframe and found that in the mid-2000s, it would have needed nearly four decades of typical employment income to join the richest segment of the wealth distribution.
A senior economist involved with the report commented: "Financial divides in Britain are presently so substantial that a average worker saving all their earnings across their entire working life would continue to be incapable to attain the highest level of the economic scale."
Assessing the Financial Disparity
The study found that the disparity between the assets of the typical individual and someone in the wealthiest decile was £1 million in the mid-2000s, but had increased to 1.3 million pounds in inflation-adjusted terms by recent times.
The economist added: "These differences are particularly worrying as financial progression in Britain is restricted – those who commence life affluent tend to stay wealthy, and conversely applies."
Relative Wealth Inequality
Despite the economic divide growing in actual numbers, the share of overall assets in the UK possessed by the richest households – called "proportional economic disparity" – has been "largely unchanged since the eighties," according to the analysis.
Throughout these years, total wealth in the UK rose substantially from triple the annual GDP, to nearly seven and a half times.
Contributors of Wealth Inequality
Referred to as "unearned" gains, through growing real estate costs and variations in superannuation evaluations, were the main drivers of the widening wealth gap over the past decade, as stated in the study.
These gains tended to accrue to older, property-owning households, the analysis reveals – intensifying the intergenerational wealth divide.
Generational Financial Divides
The typical financial disparity between individuals aged 30-34 and people aged 60-64 grew by more than 100% in real terms, from 135 thousand pounds in pre-financial crisis, to £310k.
Area-Based Disparities
Additionally, there were stark area-based disparities, with the typical amount of assets in recent years amounting to £290k in south-east England, where property prices have tended to rise rapidly, compared with 110 thousand pounds in the NE of England.
Health Crisis Years Consequences
Amid the health crisis, when countless laborers were covered under the taxpayer-backed furlough scheme, and Covid shutdowns reduced expenditure possibilities, the statistics indicate many households were capable of accumulating, enhancing their financial standing.
Higher-income households fared much better, however. "The average household in the poorest fifth saw their liquid savings grow by only eighty pounds during the COVID years (2019-20 to 2021-22), broadly the same as the pre-crisis period. In contrast, the average household in the top income bracket saw their available funds grow by 4,200 pounds," the report finds.
