According to new study, the typical employee in the UK would need half a century of income to reach the net worth of the most affluent 10% of the population.
Widening Wealth Gap Over Time
The study examined net worth data including the 2020-22 timeframe and found that back in 2006-08, it would have required 38 years' worth of average worker salary to enter the richest segment of the wealth distribution.
An economic expert involved with the analysis observed: "Financial divides in Britain are presently so substantial that a regular employee saving all their earnings throughout their career would still not be able to achieve the peak of the economic scale."
Measuring the Economic Gap
The analysis revealed that the gap between the wealth of the median citizen and someone in the richest segment was one million pounds in the pre-crisis period, but had widened to 1.3 million pounds in real terms by 2020-22.
The economist continued: "These gaps are doubly concerning as wealth mobility in Britain is low – individuals who begin life wealthy tend to remain affluent, and the opposite holds true."
Relative Wealth Inequality
Despite the economic divide expanding in actual numbers, the percentage of complete net worth in the UK possessed by the wealthiest families – known as "relative wealth inequality" – has been "mostly consistent since the 1980s," according to the study.
Throughout these years, complete net worth in the UK rose substantially from thrice the gross domestic product, to approximately 7.5x.
Contributors of Wealth Inequality
Referred to as "automatic" appreciation, by means of rising house prices and variations in superannuation evaluations, were the main drivers of the widening wealth gap from 2010 onward, per the study.
These gains typically went to senior citizens with real estate, the research shows – exacerbating the generational financial disparity.
Intergenerational Financial Divides
The typical financial disparity between thirty-somethings and those in their early 60s increased over twofold in inflation-adjusted terms, from 135 thousand pounds in the mid-2000s, to £310,000.
Area-Based Disparities
There were also significant regional variations, with the typical amount of net worth in the pandemic period standing at 290 thousand pounds in the southeastern region, where housing costs have tended to rise rapidly, compared with £110,000 in the northeastern region.
Pandemic Period Consequences
Throughout the COVID period, when numerous employees were protected by the government-supported job retention program, and Covid shutdowns limited opportunities for spending, the statistics indicate many households were capable of accumulating, increasing their wealth.
More affluent homes performed significantly better, nevertheless. "The typical family in the poorest fifth saw their cash reserves increase by just £80 throughout the health crisis (from 2019 to 2022), broadly the same as the two years pre-pandemic. On the other hand, the average household in the top income bracket saw their available funds increase by £4,200," the study reveals.
