Per new research, the average earner in the UK would need over five decades of income to reach the wealth level of the richest 10% nationwide.
Expanding Financial Divide Through the Years
This research reviewed wealth distribution statistics from the recent health crisis years and found that in the pre-financial crisis era, it would have required nearly four decades of average worker salary to reach the top 10th of the financial hierarchy.
A research lead associated with the analysis observed: "Financial divides in Britain are now so large that a average worker setting aside their entire income across their entire working life would continue to be incapable to reach the top of the financial hierarchy."
Assessing the Financial Disparity
The research discovered that the disparity between the net worth of the typical individual and a person belonging to the richest segment was £1m in the mid-2000s, but had expanded to £1.3 million in inflation-adjusted terms by the pandemic years.
The researcher added: "These gaps are doubly concerning as economic movement in Britain is restricted – individuals who begin life wealthy tend to stay wealthy, and the opposite holds true."
Relative Wealth Inequality
Despite the economic divide expanding in absolute terms, the share of overall assets in the UK owned by the wealthiest families – termed "comparative financial divide" – has been "largely unchanged since the eighties," as stated in the research.
Over this timeframe, complete net worth in the UK rose substantially from triple the annual GDP, to approximately 7.5x.
Drivers of Financial Divide
Referred to as "unearned" gains, through growing real estate costs and variations in pension valuations, were the primary factors of the growing financial disparity since 2010, per the report.
These gains tended to accrue to elderly homeowners, the analysis reveals – exacerbating the intergenerational wealth divide.
Generational Wealth Disparities
The average wealth gap between people in their early 30s and people aged 60-64 increased over twofold in inflation-adjusted terms, from £135k in the mid-2000s, to £310k.
Area-Based Variations
Additionally, there were stark regional variations, with the median value of net worth in the pandemic period reaching £290k in the southeastern region, where real estate values have typically increased quickly, versus £110k in the NE of England.
Pandemic Period Consequences
During the pandemic, when countless laborers were protected by the taxpayer-backed furlough scheme, and health crisis restrictions curtailed consumption options, the statistics indicate numerous families were able to save, enhancing their financial standing.
More affluent homes fared much better, though. "The typical family in the poorest fifth saw their available funds grow by only eighty pounds over the pandemic period (2019-20 to 2021-22), broadly the same as the 24 months before COVID. Conversely, the median home in the wealthiest fifth saw their liquid savings increase by £4,200," the analysis concludes.
