Per recent study, the average worker in the UK would have to work over five decades of earnings to attain the net worth of the most affluent 10% of the population.
Widening Wealth Gap Through the Years
The study reviewed wealth distribution statistics including the 2020-22 timeframe and determined that during 2006-08, it would have taken 38 years' worth of typical employment income to enter the wealthiest decile of the financial hierarchy.
An economic expert involved with the study stated: "Wealth gaps in Britain are now so large that a typical full-time employee setting aside their entire income throughout their career would still not be able to reach the top of the economic scale."
Assessing the Financial Disparity
The study found that the difference between the assets of the typical individual and an individual in the wealthiest decile was £1m in the pre-crisis period, but had expanded to £1.3m in real terms by recent times.
The analyst continued: "These disparities are doubly concerning as economic movement in Britain is low – individuals who begin life well-off tend to continue being rich, and the opposite holds true."
Relative Wealth Inequality
Although the economic divide growing in absolute terms, the share of total wealth in the UK possessed by the richest households – termed "relative wealth inequality" – has been "largely unchanged since the eighties," per the analysis.
Throughout these years, overall assets in the UK rose substantially from three times the yearly economic output, to almost 7.5 times.
Factors of Financial Divide
So-called "automatic" gains, via growing real estate costs and changes in retirement fund assessments, were the primary factors of the widening wealth gap from 2010 onward, per the study.
These gains generally flowed to older, property-owning households, the research shows – exacerbating the generational financial disparity.
Generational Wealth Disparities
The average wealth gap between individuals aged 30-34 and those in their early 60s grew by more than 100% in actual value, from £135k in 2006-08, to £310k.
Geographic Differences
Furthermore, the study revealed pronounced geographic differences, with the median value of wealth in the pandemic period reaching 290 thousand pounds in south-east England, where real estate values have typically increased quickly, compared with £110,000 in the northeastern region.
Pandemic Period Consequences
Amid the health crisis, when numerous employees were supported by the taxpayer-backed furlough scheme, and health crisis restrictions reduced expenditure possibilities, the data shows many households were in a position to set aside money, growing their net worth.
Higher-income households achieved superior outcomes, however. "The average household in the lowest-income quintile saw their cash reserves increase by just £80 throughout the health crisis (across the pandemic timeframe), broadly the same as the two years pre-pandemic. Conversely, the median home in the wealthiest fifth saw their cash reserves increase by £4,200," the analysis concludes.
