According to recent research, the average earner in the UK would require over five decades of salary to achieve the wealth level of the wealthiest 10% in the country.
Expanding Wealth Gap Across Decades
The study analyzed net worth information including the 2020-22 timeframe and found that in the pre-financial crisis era, it would have needed 38 years of average worker salary to reach the wealthiest decile of the economic ladder.
A senior economist involved with the analysis stated: "Financial divides in Britain are currently so significant that a average worker accumulating their complete salary during their working years would remain unable to reach the top of the financial hierarchy."
Measuring the Financial Disparity
The analysis found that the disparity between the assets of the median citizen and a person belonging to the wealthiest decile was £1 million in the mid-2000s, but had widened to £1.3 million in inflation-adjusted terms by the pandemic years.
The analyst added: "These gaps are particularly worrying as financial progression in Britain is restricted – individuals who begin life affluent tend to stay wealthy, and conversely applies."
Comparative Financial Divide
Although the economic divide growing in absolute terms, the share of complete net worth in the UK held by the most affluent homes – called "comparative financial divide" – has been "broadly stable since the 1980s," per the study.
During this period, total wealth in the UK increased dramatically from triple the yearly economic output, to approximately 7.5x.
Drivers of Wealth Inequality
So-called "unearned" appreciation, via rising house prices and adjustments to pension valuations, were the main drivers of the growing financial disparity over the past decade, as stated in the study.
These gains generally flowed to older, property-owning households, the research shows – exacerbating the generational financial disparity.
Generational Wealth Disparities
The average wealth gap between thirty-somethings and sixty-somethings increased over twofold in inflation-adjusted terms, from £135k in 2006-08, to £310,000.
Area-Based Disparities
Additionally, there were stark regional variations, with the median value of net worth in 2020-22 reaching £290k in the SE of England, where housing costs have tended to rise rapidly, versus £110,000 in the north-east.
Pandemic Period Consequences
Amid the health crisis, when millions of workers were covered under the taxpayer-backed furlough scheme, and pandemic lockdowns limited opportunities for spending, the data shows many households were able to save, increasing their wealth.
Higher-income households achieved superior outcomes, though. "The typical family in the bottom income bracket saw their available funds increase by just £80 throughout the health crisis (from 2019 to 2022), approximately equivalent to the pre-crisis period. In contrast, the typical family in the top income bracket saw their liquid savings grow by 4,200 pounds," the study reveals.
