Based on new research, the median earner in the UK would have to work over five decades of salary to attain the net worth of the richest 10% of the population.
Expanding Wealth Gap Over Time
This research analyzed net worth information from the Covid pandemic period and discovered that back in the pre-financial crisis era, it would have needed nearly four decades of median full-time earnings to enter the top 10th of the financial hierarchy.
A research lead associated with the study stated: "Wealth gaps in Britain are presently so substantial that a average worker setting aside their entire income throughout their career would remain unable to achieve the peak of the wealth ladder."
Measuring the Economic Gap
The study revealed that the gap between the assets of the median citizen and a person belonging to the richest segment was £1 million in the pre-crisis period, but had widened to 1.3 million pounds in real terms by recent times.
The researcher further stated: "These disparities are especially alarming as wealth mobility in Britain is limited – people that start life wealthy tend to remain affluent, and vice versa."
Proportional Economic Disparity
Although the wealth gap growing in absolute terms, the percentage of overall assets in the UK possessed by the wealthiest families – called "comparative financial divide" – has been "broadly stable since the 1980s," per the research.
Over this timeframe, complete net worth in the UK rose substantially from triple the annual GDP, to nearly seven and a half times.
Drivers of Wealth Inequality
Termed "automatic" gains, by means of growing real estate costs and variations in retirement fund assessments, were the main drivers of the widening wealth gap from 2010 onward, per the study.
These increases tended to accrue to senior citizens with real estate, the study demonstrates – worsening the intergenerational wealth divide.
Age-Based Financial Divides
The average wealth gap between thirty-somethings and sixty-somethings more than doubled in inflation-adjusted terms, from 135 thousand pounds in 2006-08, to 310 thousand pounds.
Geographic Variations
Additionally, there were pronounced geographic differences, with the median value of wealth in 2020-22 amounting to £290,000 in the southeastern region, where property prices have tended to rise rapidly, as opposed to £110k in the NE of England.
COVID Era Consequences
Amid the health crisis, when numerous employees were covered under the public-funded employment protection, and health crisis restrictions curtailed consumption options, the statistics indicate many households were able to save, growing their net worth.
Wealthier families fared much better, however. "The median home in the bottom income bracket saw their cash reserves increase by just £80 throughout the health crisis (2019-20 to 2021-22), roughly identical to the pre-crisis period. In contrast, the typical family in the highest income quintile saw their available funds grow by 4,200 pounds," the report finds.
