According to recent analysis, the average earner in the UK would have to work half a century of salary to achieve the financial standing of the wealthiest 10% in the country.
Growing Financial Divide Through the Years
The study examined net worth statistics from the 2020-22 timeframe and determined that in the mid-2000s, it would have taken 38 years' worth of average worker salary to join the wealthiest decile of the financial hierarchy.
A senior economist involved with the study stated: "Wealth gaps in Britain are now so large that a average worker setting aside their entire income throughout their career would remain unable to attain the highest level of the financial hierarchy."
Measuring the Economic Gap
The study found that the gap between the net worth of the typical individual and someone in the richest segment was £1 million in the mid-2000s, but had expanded to £1.3 million in actual value by 2020-22.
The economist continued: "These disparities are doubly concerning as wealth mobility in Britain is restricted – people that start life well-off tend to remain affluent, and the opposite holds true."
Comparative Financial Divide
Although the economic divide widening in absolute terms, the portion of overall assets in the UK owned by the richest households – called "proportional economic disparity" – has been "broadly stable since the 1980s," per the analysis.
During this period, overall assets in the UK rose substantially from three times the annual GDP, to approximately 7.5x.
Contributors of Economic Disparity
So-called "unearned" increases, via increasing property values and adjustments to superannuation evaluations, were the key contributors of the expanding economic divide over the past decade, as stated in the study.
These gains typically went to elderly homeowners, the analysis reveals – worsening the generational financial disparity.
Generational Financial Divides
The average wealth gap between people in their early 30s and those in their early 60s grew by more than 100% in inflation-adjusted terms, from 135 thousand pounds in the mid-2000s, to £310k.
Area-Based Disparities
Additionally, there were stark area-based disparities, with the average level of wealth in 2020-22 amounting to £290,000 in the SE of England, where real estate values have tended to rise rapidly, versus £110k in the northeastern region.
Pandemic Period Effects
Throughout the COVID period, when countless laborers were covered under the government-supported job retention program, and pandemic lockdowns limited opportunities for spending, the data shows many households were able to save, increasing their wealth.
More affluent homes achieved superior outcomes, however. "The median home in the lowest-income quintile saw their liquid savings increase by just £80 throughout the health crisis (across the pandemic timeframe), roughly identical to the two years pre-pandemic. In contrast, the median home in the wealthiest fifth saw their cash reserves grow by 4,200 pounds," the report finds.
