According to recent research, the typical worker in the UK would require half a century of earnings to attain the wealth level of the most affluent 10% of the population.
Expanding Wealth Gap Over Time
The study examined wealth distribution statistics from the 2020-22 timeframe and determined that back in 2006-08, it would have needed 38 years' worth of median full-time earnings to join the top 10th of the wealth distribution.
A research lead part of the report commented: "Wealth gaps in Britain are now so large that a regular employee saving all their earnings during their working years would remain unable to attain the highest level of the financial hierarchy."
Measuring the Economic Gap
The study found that the gap between the assets of the average person and an individual in the top 10% was one million pounds in the pre-crisis period, but had expanded to £1.3m in actual value by 2020-22.
The economist further stated: "These differences are doubly concerning as financial progression in Britain is low – people that start life wealthy tend to stay wealthy, and the opposite holds true."
Comparative Financial Divide
Even with the economic divide widening in actual numbers, the percentage of overall assets 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 rose substantially from triple the yearly economic output, to approximately 7.5x.
Contributors of Financial Divide
So-called "unearned" increases, via rising house prices and changes in retirement fund assessments, were the main drivers of the growing financial disparity over the past decade, as stated in the report.
These increases typically went to senior citizens with real estate, the research shows – worsening the intergenerational wealth divide.
Intergenerational Wealth Disparities
The typical financial disparity between individuals aged 30-34 and sixty-somethings grew by more than 100% in inflation-adjusted terms, from 135 thousand pounds in pre-financial crisis, to 310 thousand pounds.
Area-Based Differences
There were also significant regional variations, with the typical amount of net worth in the pandemic period standing at 290 thousand pounds in south-east England, where real estate values have typically increased quickly, as opposed to £110,000 in the NE of England.
COVID Era Impact
During the pandemic, when millions of workers were supported by the government-supported job retention program, and pandemic lockdowns reduced expenditure possibilities, the data shows many households were in a position to set aside money, increasing their wealth.
More affluent homes achieved superior outcomes, nevertheless. "The typical family 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 24 months before COVID. In contrast, the average household in the top income bracket saw their cash reserves increase by £4,200," the study reveals.
