Based on fresh research, the median worker in the UK would need half a century of salary to achieve the net worth of the wealthiest 10% of the population.
Widening Financial Divide Through the Years
This research analyzed net worth data from the Covid pandemic period and discovered that in 2006-08, it would have needed nearly four decades of average worker salary to reach the wealthiest decile of the financial hierarchy.
A senior economist associated with the analysis observed: "Financial divides in Britain are currently so significant that a regular employee accumulating their complete salary across their entire working life would continue to be incapable to achieve the peak of the financial hierarchy."
Measuring the Financial Disparity
The research revealed that the gap between the assets of the typical individual and a person belonging to the top 10% was £1 million in the pre-crisis period, but had widened to £1.3m in inflation-adjusted terms by the pandemic years.
The analyst continued: "These differences are especially alarming as economic movement in Britain is low – those who commence life affluent tend to remain affluent, and the opposite holds true."
Comparative Financial Divide
Even with the economic divide widening in actual numbers, the percentage of complete net worth in the UK owned by the most affluent homes – known as "comparative financial divide" – has been "broadly stable since the 1980s," per the research.
During this period, overall assets in the UK surged from three times the annual GDP, to approximately 7.5x.
Factors of Wealth Inequality
Referred to as "automatic" increases, by means of increasing property values and variations in superannuation evaluations, were the primary factors of the expanding economic divide since 2010, per the study.
These appreciations tended to accrue to older, property-owning households, the analysis reveals – exacerbating the intergenerational wealth divide.
Age-Based Economic Gaps
The median economic difference between thirty-somethings and those in their early 60s increased over twofold in actual value, from £135,000 in pre-financial crisis, to £310,000.
Geographic Differences
There were also pronounced geographic differences, with the median value of net worth in recent years standing at 290 thousand pounds in the SE of England, where housing costs have tended to rise rapidly, as opposed to £110k in the north-east.
Pandemic Period Impact
Amid the health crisis, when millions of workers were covered under the government-supported job retention program, and health crisis restrictions reduced expenditure possibilities, the statistics indicate numerous families were able to save, growing their net worth.
Higher-income households achieved superior outcomes, nevertheless. "The typical family in the lowest-income quintile saw their liquid savings rise by merely £80 over the pandemic period (from 2019 to 2022), roughly identical to the pre-crisis period. Conversely, the typical family in the top income bracket saw their liquid savings increase by £4,200," the analysis concludes.
