According to recent study, the typical earner in the UK would have to work half a century of income to achieve the net worth of the wealthiest 10% in the country.
Widening Financial Divide Across Decades
The study examined financial assets statistics from the recent health crisis years and determined that during the pre-financial crisis era, it would have needed 38 years of median full-time earnings to join the richest segment of the economic ladder.
A senior economist part of the report commented: "Financial divides in Britain are now so large that a average worker setting aside their entire income throughout their career would remain unable to achieve the peak of the economic scale."
Measuring the Wealth Divide
The study discovered that the gap between the net worth of the typical individual and a person belonging to the top 10% was one million pounds in 2006-08, but had widened to £1.3 million in actual value by recent times.
The analyst added: "These gaps are doubly concerning as economic movement in Britain is limited – individuals who begin life well-off tend to remain affluent, and vice versa."
Relative Wealth Inequality
Despite the economic divide expanding in absolute terms, the share of total wealth in the UK owned by the richest households – known as "proportional economic disparity" – has been "broadly stable since the eighties," according to the research.
Over this timeframe, complete net worth in the UK surged from three times the annual GDP, to almost 7.5 times.
Factors of Financial Divide
So-called "passive" gains, by means of growing real estate costs and changes in retirement fund assessments, were the key contributors of the widening wealth gap since 2010, as stated in the analysis.
These increases tended to accrue to senior citizens with real estate, the research shows – intensifying the intergenerational wealth divide.
Intergenerational Financial Divides
The average wealth gap between individuals aged 30-34 and people aged 60-64 increased over twofold in inflation-adjusted terms, from £135,000 in the mid-2000s, to £310k.
Geographic Disparities
There were also significant geographic differences, with the average level of net worth in the pandemic period standing at £290k in south-east England, where property prices have generally grown substantially, compared with 110 thousand pounds in the NE of England.
Pandemic Period Consequences
Throughout the COVID period, when millions of workers were protected by the government-supported job retention program, and Covid shutdowns limited opportunities for spending, the information reveals countless homes were capable of accumulating, growing their net worth.
Wealthier families fared much better, though. "The median home in the bottom income bracket saw their available funds rise by merely £80 over the pandemic period (across the pandemic timeframe), approximately equivalent to the two years pre-pandemic. In contrast, the average household in the highest income quintile saw their liquid savings grow by 4,200 pounds," the report finds.
