Based on recent research, the average employee in the UK would need half a century of salary to achieve the net worth of the wealthiest 10% in the country.
Expanding Financial Divide Through the Years
This research examined net worth information from the Covid pandemic period and determined that in the mid-2000s, it would have needed nearly four decades of average worker salary to reach the top 10th of the wealth distribution.
An economic expert involved with the study stated: "Wealth gaps in Britain are now so large that a typical full-time employee saving all their earnings during their working years would continue to be incapable to reach the top of the wealth ladder."
Assessing the Wealth Divide
The study discovered that the difference between the wealth of the average person and an individual in the wealthiest decile was £1m in 2006-08, but had increased to £1.3m in actual value by the pandemic years.
The economist added: "These differences are particularly worrying as financial progression in Britain is low – people that start life wealthy tend to stay wealthy, and vice versa."
Proportional Economic Disparity
Although the financial disparity growing in absolute terms, the share of total wealth in the UK held by the richest households – called "proportional economic disparity" – has been "mostly consistent since the 1980s," per the research.
Over this timeframe, overall assets in the UK increased dramatically from three times the gross domestic product, to almost 7.5 times.
Contributors of Wealth Inequality
So-called "passive" appreciation, via rising house prices and variations in pension valuations, were the key contributors of the widening wealth gap since 2010, according to the analysis.
These increases tended to accrue to elderly homeowners, the analysis reveals – intensifying the age-based economic gap.
Intergenerational Financial Divides
The average wealth gap between people in their early 30s and people aged 60-64 more than doubled in actual value, from £135,000 in 2006-08, to £310k.
Geographic Differences
There were also significant geographic differences, with the average level of assets in recent years amounting to 290 thousand pounds in the SE of England, where real estate values have generally grown substantially, versus £110k in the north-east.
Pandemic Period Impact
Amid the health crisis, when numerous employees were supported by the taxpayer-backed furlough scheme, and pandemic lockdowns reduced expenditure possibilities, the information reveals numerous families were capable of accumulating, growing their net worth.
Wealthier families performed significantly better, nevertheless. "The median home in the poorest fifth saw their available funds grow by only eighty pounds throughout the health crisis (2019-20 to 2021-22), broadly the same as the two years pre-pandemic. Conversely, the median home in the wealthiest fifth saw their cash reserves grow by 4,200 pounds," the analysis concludes.
