Per new study, the median earner in the UK would have to work half a century of salary to reach the wealth level of the richest 10% nationwide.
Expanding Financial Divide Through the Years
The study reviewed financial assets data covering the 2020-22 timeframe and found that back in the mid-2000s, it would have required 38 years' worth of typical employment income to join the top 10th of the economic ladder.
An economic expert involved with the report observed: "Financial divides in Britain are currently so significant that a average worker accumulating their complete salary across their entire working life would remain unable to attain the highest level of the wealth ladder."
Assessing the Economic Gap
The research found that the difference between the net worth of the median citizen and a person belonging to the richest segment was £1 million in the pre-crisis period, but had widened to £1.3m in real terms by recent times.
The analyst continued: "These disparities are particularly worrying as wealth mobility in Britain is low – people that start life well-off tend to continue being rich, and the opposite holds true."
Relative Wealth Inequality
Despite the economic divide expanding in absolute terms, the portion of complete net worth in the UK owned by the richest households – called "proportional economic disparity" – has been "mostly consistent since the 1980s era," per the analysis.
During this period, overall assets in the UK surged from three times the annual GDP, to approximately 7.5x.
Contributors of Financial Divide
So-called "automatic" appreciation, by means of rising house prices and adjustments to retirement fund assessments, were the primary factors of the widening wealth gap from 2010 onward, per the report.
These appreciations generally flowed to older, property-owning households, the analysis reveals – worsening the intergenerational wealth divide.
Intergenerational Wealth Disparities
The average wealth gap between thirty-somethings and those in their early 60s more than doubled in actual value, from £135k in the mid-2000s, to 310 thousand pounds.
Area-Based Disparities
Additionally, there were pronounced area-based disparities, with the median value of net worth in recent years standing at 290 thousand pounds in the southeastern region, where housing costs have generally grown substantially, compared with 110 thousand pounds in the northeastern region.
COVID Era Consequences
Amid the health crisis, when numerous employees were supported by the taxpayer-backed furlough scheme, and health crisis restrictions curtailed consumption options, the data shows countless homes were able to save, increasing their wealth.
Wealthier families achieved superior outcomes, nevertheless. "The typical family in the lowest-income quintile saw their available funds increase by just £80 throughout the health crisis (2019-20 to 2021-22), roughly identical to the 24 months before COVID. In contrast, the median home in the wealthiest fifth saw their available funds increase by £4,200," the study reveals.
