Based on recent research, the typical employee in the UK would need half a century of income to reach the net worth of the wealthiest 10% in the country.
Expanding Economic Disparity Across Decades
The analysis reviewed net worth statistics from the Covid pandemic period and found that back in 2006-08, it would have taken nearly four decades of typical employment income to join the wealthiest decile of the economic ladder.
A senior economist involved with the report observed: "Wealth gaps in Britain are now so large that a average worker setting aside their entire income during their working years would remain unable to achieve the peak of the financial hierarchy."
Assessing the Wealth Divide
The analysis revealed that the difference between the assets of the typical individual and someone in the richest segment was £1m in the mid-2000s, but had expanded to £1.3 million in inflation-adjusted terms by 2020-22.
The analyst added: "These disparities are particularly worrying as economic movement in Britain is limited – individuals who begin life wealthy tend to continue being rich, and vice versa."
Proportional Economic Disparity
Although the economic divide expanding in specific figures, the percentage of complete net worth in the UK held by the wealthiest families – called "comparative financial divide" – has been "largely unchanged since the eighties," as stated in the research.
Throughout these years, complete net worth in the UK surged from thrice the gross domestic product, to almost 7.5 times.
Contributors of Financial Divide
So-called "automatic" gains, through rising house prices and variations in retirement fund assessments, were the key contributors of the expanding economic divide since 2010, as stated in the analysis.
These appreciations typically went to older, property-owning households, the study demonstrates – intensifying the generational financial disparity.
Generational Economic Gaps
The average wealth gap between thirty-somethings and people aged 60-64 more than doubled in actual value, from £135,000 in the mid-2000s, to 310 thousand pounds.
Geographic Variations
There were also stark regional variations, with the average level of net worth in the pandemic period standing at £290,000 in south-east England, where real estate values have typically increased quickly, versus £110k in the north-east.
COVID Era Effects
Amid the health crisis, when numerous employees were protected by the public-funded employment protection, and pandemic lockdowns limited opportunities for spending, the statistics indicate many households were able to save, growing their net worth.
Higher-income households fared much better, nevertheless. "The average household in the bottom income bracket saw their available funds grow by only eighty pounds over the pandemic period (2019-20 to 2021-22), approximately equivalent to the 24 months before COVID. In contrast, the typical family in the wealthiest fifth saw their cash reserves increase by £4,200," the study reveals.
