According to fresh analysis, the average worker in the UK would need over five decades of income to achieve the net worth of the richest 10% of the population.
Growing Economic Disparity Across Decades
The analysis examined financial assets statistics including the recent health crisis years and discovered that in the mid-2000s, it would have taken 38 years' worth of average worker salary to reach the wealthiest decile of the wealth distribution.
A research lead associated with the report commented: "Economic disparities in Britain are presently so substantial that a average worker saving all their earnings during their working years would continue to be incapable to reach the top of the economic scale."
Measuring the Economic Gap
The study discovered that the disparity between the net worth of the average person and a person belonging to the wealthiest decile was £1 million in the pre-crisis period, but had expanded to £1.3m in inflation-adjusted terms by 2020-22.
The economist further stated: "These gaps are particularly worrying as economic movement in Britain is restricted – people that start life affluent tend to stay wealthy, and the opposite holds true."
Proportional Economic Disparity
Even with the wealth gap expanding in specific figures, the portion of total wealth in the UK held by the richest households – called "relative wealth inequality" – has been "broadly stable since the eighties," as stated in the analysis.
Over this timeframe, total wealth in the UK surged from triple the annual GDP, to almost 7.5 times.
Drivers of Wealth Inequality
So-called "automatic" gains, through increasing property values and adjustments to retirement fund assessments, were the primary factors of the widening wealth gap since 2010, per the analysis.
These gains generally flowed to older, property-owning households, the analysis reveals – intensifying the generational financial disparity.
Generational Financial Divides
The average wealth gap between people in their early 30s and sixty-somethings grew by more than 100% in real terms, from £135k in the mid-2000s, to 310 thousand pounds.
Regional Disparities
Furthermore, the study revealed significant regional variations, with the average level of wealth in recent years amounting to £290k in the southeastern region, where real estate values have tended to rise rapidly, compared with £110k in the northeastern region.
Health Crisis Years Effects
Amid the health crisis, when numerous employees were covered under the public-funded employment protection, and pandemic lockdowns curtailed consumption options, the data shows many households were able to save, increasing their wealth.
More affluent homes fared much better, though. "The typical family in the poorest fifth saw their liquid savings increase by just £80 during the COVID years (from 2019 to 2022), approximately equivalent to the 24 months before COVID. In contrast, the typical family in the wealthiest fifth saw their available funds increase by £4,200," the study reveals.
