Per new research, the median earner in the UK would need 52 years' worth of income to achieve the wealth level of the wealthiest 10% of the population.
Growing Economic Disparity Over Time
The analysis reviewed net worth statistics including the Covid pandemic period and discovered that back in the mid-2000s, it would have required nearly four decades of average worker salary to join the wealthiest decile of the financial hierarchy.
A research lead associated with the study observed: "Economic disparities in Britain are presently so substantial that a typical full-time employee setting aside their entire income throughout their career would continue to be incapable to achieve the peak of the financial hierarchy."
Quantifying the Wealth Divide
The analysis found that the gap between the assets of the median citizen and someone in the top 10% was £1m in the pre-crisis period, but had widened to £1.3m in actual value by 2020-22.
The economist continued: "These gaps are particularly worrying as wealth mobility in Britain is low – people that start life well-off tend to stay wealthy, and vice versa."
Comparative Financial Divide
Even with the economic divide growing in absolute terms, the share of complete net worth in the UK possessed by the richest households – termed "comparative financial divide" – has been "mostly consistent since the 1980s," according to the research.
Over this timeframe, complete net worth in the UK surged from triple the gross domestic product, to nearly seven and a half times.
Contributors of Wealth Inequality
So-called "passive" appreciation, through increasing property values and adjustments to retirement fund assessments, were the main drivers of the expanding economic divide over the past decade, as stated in the study.
These increases tended to accrue to elderly homeowners, the analysis reveals – worsening the intergenerational wealth divide.
Intergenerational Financial Divides
The average wealth gap between thirty-somethings and people aged 60-64 more than doubled in real terms, from £135k in pre-financial crisis, to £310,000.
Geographic Variations
There were also significant regional variations, with the median value of net worth in 2020-22 amounting to 290 thousand pounds in the SE of England, where property prices have typically increased quickly, versus £110k in the NE of England.
Health Crisis Years Consequences
Amid the health crisis, when millions of workers were supported by the government-supported job retention program, and pandemic lockdowns limited opportunities for spending, the data shows numerous families were able to save, enhancing their financial standing.
Wealthier families fared much better, though. "The typical family in the bottom income bracket saw their liquid savings increase by just £80 over the pandemic period (across the pandemic timeframe), broadly the same as the two years pre-pandemic. On the other hand, the average household in the highest income quintile saw their liquid savings rise by £4,200," the report finds.
