Per recent analysis, the average employee in the UK would require half a century of salary to reach the net worth of the most affluent 10% in the country.
Expanding Wealth Gap Through the Years
The analysis examined financial assets information from the Covid pandemic period and determined that in the mid-2000s, it would have taken 38 years of median full-time earnings to reach the wealthiest decile of the economic ladder.
A senior economist involved with the analysis commented: "Financial divides in Britain are currently so significant that a regular employee saving all their earnings throughout their career would continue to be incapable to reach the top of the wealth ladder."
Quantifying the Economic Gap
The study discovered that the gap between the net worth of the average person and someone in the richest segment was one million pounds in the pre-crisis period, but had expanded to 1.3 million pounds in inflation-adjusted terms by recent times.
The researcher continued: "These gaps are especially alarming as economic movement in Britain is limited – people that start life wealthy tend to remain affluent, and the opposite holds true."
Proportional Economic Disparity
Even with the wealth gap expanding in actual numbers, the share of complete net worth in the UK possessed by the wealthiest families – known as "relative wealth inequality" – has been "mostly consistent since the eighties," according to the research.
Over this timeframe, complete net worth in the UK surged from three times the gross domestic product, to almost 7.5 times.
Factors of Financial Divide
So-called "automatic" increases, via increasing property values and variations in retirement fund assessments, were the main drivers of the expanding economic divide over the past decade, as stated in the study.
These increases typically went to elderly homeowners, the study demonstrates – intensifying the age-based economic gap.
Age-Based Economic Gaps
The average wealth gap between people in their early 30s and those in their early 60s grew by more than 100% in inflation-adjusted terms, from 135 thousand pounds in 2006-08, to £310,000.
Area-Based Variations
Furthermore, the study revealed stark geographic differences, with the median value of wealth in the pandemic period amounting to £290,000 in the southeastern region, where property prices have typically increased quickly, compared with £110,000 in the north-east.
Health Crisis Years Consequences
Amid the health crisis, when countless laborers were covered under the taxpayer-backed furlough scheme, and pandemic lockdowns limited opportunities for spending, the statistics indicate countless homes were able to save, increasing their wealth.
Higher-income households achieved superior outcomes, however. "The average household in the lowest-income quintile saw their cash reserves rise by merely £80 over the pandemic period (from 2019 to 2022), broadly the same as the two years pre-pandemic. On the other hand, the median home in the top income bracket saw their liquid savings grow by 4,200 pounds," the study reveals.
