Per new study, the median worker in the UK would require over five decades of income to attain the net worth of the richest 10% nationwide.
Growing Financial Divide Over Time
The study reviewed net worth information covering the 2020-22 timeframe and found that during 2006-08, it would have needed 38 years of typical employment income to enter the top 10th of the wealth distribution.
A research lead part of the analysis stated: "Economic disparities in Britain are now so large that a typical full-time employee setting aside their entire income during their working years would still not be able to achieve the peak of the financial hierarchy."
Measuring the Wealth Divide
The study discovered that the gap between the net worth of the typical individual and someone in the richest segment was £1m in the pre-crisis period, but had expanded to £1.3m in real terms by the pandemic years.
The economist further stated: "These differences are doubly concerning as economic movement in Britain is restricted – those who commence life affluent tend to stay wealthy, and vice versa."
Comparative Financial Divide
Although the economic divide expanding in absolute terms, the share of complete net worth in the UK possessed by the richest households – known as "proportional economic disparity" – has been "mostly consistent since the 1980s," as stated in the study.
Throughout these years, complete net worth in the UK surged from three times the annual GDP, to approximately 7.5x.
Contributors of Financial Divide
So-called "unearned" increases, by means of increasing property values and changes in pension valuations, were the main drivers of the growing financial disparity from 2010 onward, as stated in the analysis.
These gains typically went to elderly homeowners, the study demonstrates – worsening the generational financial disparity.
Intergenerational Financial Divides
The typical financial disparity between thirty-somethings and people aged 60-64 more than doubled in inflation-adjusted terms, from £135k in the mid-2000s, to £310k.
Area-Based Variations
Furthermore, the study revealed pronounced area-based disparities, with the typical amount of assets in recent years reaching £290k in south-east England, where property prices have tended to rise rapidly, as opposed to £110k in the north-east.
Pandemic Period Consequences
Amid the health crisis, when millions of workers were covered under the public-funded employment protection, and health crisis restrictions limited opportunities for spending, the data shows countless homes were in a position to set aside money, increasing their wealth.
Wealthier families performed significantly better, nevertheless. "The median home in the bottom income bracket saw their available funds increase by just £80 over the pandemic period (across the pandemic timeframe), roughly identical to the pre-crisis period. On the other hand, the typical family in the highest income quintile saw their cash reserves rise by £4,200," the report finds.
