Based on new research, the median worker in the UK would have to work half a century of salary to reach the financial standing of the wealthiest 10% nationwide.
Expanding Financial Divide Through the Years
The analysis examined wealth distribution data including the recent health crisis years and found that in the pre-financial crisis era, it would have needed nearly four decades of average worker salary to join the wealthiest decile of the wealth distribution.
A senior economist part of the report commented: "Wealth gaps in Britain are currently so significant that a average worker accumulating their complete salary throughout their career would remain unable to achieve the peak of the wealth ladder."
Measuring the Financial Disparity
The study discovered that the disparity between the wealth of the average person and an individual in the wealthiest decile was one million pounds in 2006-08, but had increased to 1.3 million pounds in real terms by 2020-22.
The researcher added: "These gaps are especially alarming as financial progression in Britain is low – those who commence life well-off tend to remain affluent, and vice versa."
Comparative Financial Divide
Although the wealth gap growing in absolute terms, the portion of overall assets in the UK possessed by the most affluent homes – termed "relative wealth inequality" – has been "broadly stable since the 1980s era," per the research.
Throughout these years, total wealth in the UK increased dramatically from thrice the annual GDP, to almost 7.5 times.
Drivers of Wealth Inequality
Referred to as "automatic" appreciation, via rising house prices and adjustments to superannuation evaluations, were the primary factors of the expanding economic divide over the past decade, as stated in the study.
These gains tended to accrue to older, property-owning households, the study demonstrates – intensifying the generational financial disparity.
Age-Based Economic Gaps
The typical financial disparity between thirty-somethings and people aged 60-64 grew by more than 100% in actual value, from £135,000 in the mid-2000s, to £310,000.
Geographic Variations
Additionally, there were stark regional variations, with the average level of wealth in the pandemic period amounting to 290 thousand pounds in the SE of England, where housing costs have generally grown substantially, versus 110 thousand pounds in the north-east.
Health Crisis Years Impact
Amid the health crisis, when countless laborers were supported by the taxpayer-backed furlough scheme, and pandemic lockdowns reduced expenditure possibilities, the data shows numerous families were capable of accumulating, growing their net worth.
More affluent homes achieved superior outcomes, however. "The median home in the poorest fifth saw their liquid savings increase by just £80 throughout the health crisis (from 2019 to 2022), approximately equivalent to the two years pre-pandemic. Conversely, the average household in the highest income quintile saw their liquid savings increase by £4,200," the report finds.
