Per new analysis, the average worker in the UK would need over five decades of salary to attain the wealth level of the richest 10% of the population.
Expanding Financial Divide Through the Years
The analysis reviewed net worth data covering the Covid pandemic period and discovered that in the pre-financial crisis era, it would have taken 38 years' worth of average worker salary to enter the wealthiest decile of the wealth distribution.
An economic expert involved with the report stated: "Financial divides in Britain are now so large that a regular employee setting aside their entire income throughout their career would still not be able to reach the top of the wealth ladder."
Assessing the Wealth Divide
The research found that the difference between the wealth of the typical individual and a person belonging to the top 10% was £1m in the pre-crisis period, but had expanded to £1.3m in inflation-adjusted terms by the pandemic years.
The economist added: "These differences are especially alarming as financial progression in Britain is low – individuals who begin life well-off tend to continue being rich, and vice versa."
Comparative Financial Divide
Although the financial disparity widening in actual numbers, the portion of total wealth in the UK owned by the wealthiest families – termed "relative wealth inequality" – has been "mostly consistent since the 1980s," per the study.
During this period, overall assets in the UK rose substantially from triple the gross domestic product, to nearly seven and a half times.
Contributors of Wealth Inequality
So-called "automatic" increases, via rising house prices and variations in superannuation evaluations, were the main drivers of the growing financial disparity since 2010, per the report.
These increases typically went to senior citizens with real estate, the research shows – intensifying the intergenerational wealth divide.
Intergenerational Wealth Disparities
The median economic difference between people in their early 30s and those in their early 60s more than doubled in actual value, from £135k in 2006-08, to 310 thousand pounds.
Regional Variations
There were also stark area-based disparities, with the average level of assets in recent years reaching 290 thousand pounds in the southeastern region, where property prices have tended to rise rapidly, as opposed to £110k in the NE of England.
COVID Era Consequences
Amid the health crisis, when numerous employees were covered under the public-funded employment protection, and Covid shutdowns reduced expenditure possibilities, the statistics indicate many households were able to save, growing their net worth.
More affluent homes fared much better, however. "The median home in the lowest-income quintile saw their cash reserves increase by just £80 over the pandemic period (across the pandemic timeframe), approximately equivalent to the two years pre-pandemic. In contrast, the typical family in the wealthiest fifth saw their cash reserves rise by £4,200," the study reveals.
