Per recent analysis, the typical worker in the UK would have to work over five decades of salary to achieve the net worth of the most affluent 10% in the country.
Growing Financial Divide Across Decades
This research analyzed wealth distribution information including the Covid pandemic period and found that back in 2006-08, it would have needed 38 years' worth of average worker salary to join the wealthiest decile of the wealth distribution.
A research lead involved with the study observed: "Economic disparities in Britain are currently so significant that a regular employee setting aside their entire income across their entire working life would remain unable to reach the top of the economic scale."
Assessing the Financial Disparity
The research found that the disparity between the wealth of the median citizen and someone in the wealthiest decile was one million pounds in 2006-08, but had expanded to £1.3 million in inflation-adjusted terms by the pandemic years.
The researcher further stated: "These gaps are especially alarming as financial progression in Britain is limited – those who commence life wealthy tend to stay wealthy, and conversely applies."
Relative Wealth Inequality
Despite the wealth gap growing in absolute terms, the percentage of total wealth in the UK possessed by the wealthiest families – known as "comparative financial divide" – has been "broadly stable since the eighties," according to the research.
Over this timeframe, total wealth in the UK increased dramatically from three times the yearly economic output, to almost 7.5 times.
Drivers of Financial Divide
So-called "passive" increases, by means of increasing property values and variations in retirement fund assessments, were the main drivers of the widening wealth gap since 2010, per the report.
These gains typically went to senior citizens with real estate, the research shows – intensifying the age-based economic gap.
Intergenerational Wealth Disparities
The typical financial disparity between people in their early 30s and people aged 60-64 grew by more than 100% in real terms, from £135,000 in 2006-08, to £310k.
Regional Disparities
Furthermore, the study revealed stark regional variations, with the average level of net worth in recent years reaching £290,000 in the southeastern region, where housing costs have generally grown substantially, as opposed to 110 thousand pounds in the NE of England.
Pandemic Period Consequences
Amid the health crisis, when countless laborers were protected by the public-funded employment protection, and Covid shutdowns curtailed consumption options, the statistics indicate many households were able to save, enhancing their financial standing.
More affluent homes performed significantly better, nevertheless. "The average household in the poorest fifth saw their available funds rise by merely £80 throughout the health crisis (across the pandemic timeframe), broadly the same as the two years pre-pandemic. On the other hand, the average household in the top income bracket saw their liquid savings rise by £4,200," the report finds.
