According to new study, the average earner in the UK would have to work half a century of earnings to reach the wealth level of the richest 10% of the population.
Expanding Financial Divide Across Decades
The analysis analyzed financial assets information covering the recent health crisis years and found that in the pre-financial crisis era, it would have required 38 years' worth of average worker salary to reach the richest segment of the financial hierarchy.
An economic expert involved with the study stated: "Wealth gaps in Britain are now so large that a regular employee saving all their earnings during their working years would still not be able to attain the highest level of the financial hierarchy."
Measuring the Economic Gap
The research discovered that the gap between the wealth of the typical individual and an individual in the top 10% was £1m in the pre-crisis period, but had widened to £1.3 million in real terms by recent times.
The researcher further stated: "These disparities are especially alarming as wealth mobility in Britain is low – individuals who begin life affluent tend to continue being rich, and the opposite holds true."
Relative Wealth Inequality
Although the financial disparity growing in specific figures, the portion of complete net worth in the UK possessed by the wealthiest families – termed "comparative financial divide" – has been "broadly stable since the 1980s era," per the research.
During this period, overall assets in the UK surged from three times the gross domestic product, to nearly seven and a half times.
Factors of Financial Divide
Termed "passive" gains, through rising house prices and changes in retirement fund assessments, were the primary factors of the widening wealth gap from 2010 onward, according to the study.
These gains tended to accrue to senior citizens with real estate, the study demonstrates – worsening the intergenerational wealth divide.
Generational Wealth Disparities
The average wealth gap between thirty-somethings and those in their early 60s increased over twofold in inflation-adjusted terms, from £135,000 in 2006-08, to £310,000.
Area-Based Differences
There were also stark geographic differences, with the average level of wealth in recent years reaching £290,000 in the SE of England, where real estate values have typically increased quickly, as opposed to £110k in the NE of England.
Pandemic Period Impact
Amid the health crisis, when numerous employees were protected by the public-funded employment protection, and pandemic lockdowns curtailed consumption options, the statistics indicate numerous families were capable of accumulating, increasing their wealth.
More affluent homes fared much better, however. "The median home in the lowest-income quintile saw their available funds rise by merely £80 over the pandemic period (2019-20 to 2021-22), roughly identical to the pre-crisis period. On the other hand, the average household in the wealthiest fifth saw their cash reserves increase by £4,200," the study reveals.
