Per new analysis, the median earner in the UK would require over five decades of earnings to attain the wealth level of the wealthiest 10% in the country.
Growing Financial Divide Across Decades
This research reviewed net worth statistics covering the Covid pandemic period and found that back in 2006-08, it would have required nearly four decades of median full-time earnings to join the richest segment of the economic ladder.
A research lead involved with the report observed: "Financial divides in Britain are presently so substantial that a regular employee saving all their earnings throughout their career would continue to be incapable to achieve the peak of the financial hierarchy."
Assessing the Economic Gap
The research revealed that the difference between the net worth of the typical individual and an individual in the wealthiest decile was one million pounds in 2006-08, but had increased to £1.3m in inflation-adjusted terms by the pandemic years.
The economist added: "These disparities are doubly concerning as wealth mobility in Britain is restricted – those who commence life affluent tend to stay wealthy, and vice versa."
Comparative Financial Divide
Despite the financial disparity widening in specific figures, the portion of overall assets in the UK owned by the most affluent homes – termed "comparative financial divide" – has been "broadly stable since the 1980s," as stated in the analysis.
Throughout these years, complete net worth in the UK increased dramatically from three times the annual GDP, to nearly seven and a half times.
Drivers of Wealth Inequality
Referred to as "passive" gains, via rising house prices and variations in retirement fund assessments, were the main drivers of the expanding economic divide from 2010 onward, per the study.
These increases tended to accrue to elderly homeowners, the research shows – worsening the intergenerational wealth divide.
Generational Financial Divides
The typical financial disparity between individuals aged 30-34 and people aged 60-64 more than doubled in real terms, from £135k in 2006-08, to £310k.
Geographic Differences
There were also stark regional variations, with the average level of assets in 2020-22 amounting to £290,000 in south-east England, where real estate values have tended to rise rapidly, compared with £110,000 in the north-east.
COVID Era Consequences
Throughout the COVID period, when millions of workers were supported by the taxpayer-backed furlough scheme, and pandemic lockdowns curtailed consumption options, the data shows countless homes were capable of accumulating, increasing their wealth.
More affluent homes performed significantly better, nevertheless. "The average household in the poorest fifth saw their available funds grow by only eighty pounds over the pandemic period (across the pandemic timeframe), broadly the same as the pre-crisis period. In contrast, the median home in the wealthiest fifth saw their cash reserves rise by £4,200," the analysis concludes.
