Based on new study, the average employee in the UK would require half a century of earnings to attain the net worth of the richest 10% of the population.
Widening Wealth Gap Through the Years
This research analyzed financial assets data covering the recent health crisis years and discovered that during the pre-financial crisis era, it would have required nearly four decades of average worker salary to join the wealthiest decile of the financial hierarchy.
An economic expert part of the report stated: "Economic disparities in Britain are presently so substantial that a average worker saving all their earnings throughout their career would remain unable to reach the top of the economic scale."
Assessing the Economic Gap
The research discovered that the gap between the wealth of the typical individual and someone in the wealthiest decile was one million pounds in the pre-crisis period, but had expanded to 1.3 million pounds in inflation-adjusted terms by the pandemic years.
The economist further stated: "These disparities are especially alarming as wealth mobility in Britain is restricted – individuals who begin life wealthy tend to stay wealthy, and conversely applies."
Comparative Financial Divide
Despite the financial disparity growing in specific figures, the percentage of complete net worth in the UK owned by the richest households – called "comparative financial divide" – has been "mostly consistent since the eighties," per the study.
During this period, complete net worth in the UK rose substantially from three times the annual GDP, to almost 7.5 times.
Drivers of Financial Divide
So-called "unearned" increases, by means of increasing property values and variations in pension valuations, were the primary factors of the expanding economic divide over the past decade, per the report.
These increases typically went to older, property-owning households, the research shows – exacerbating the age-based economic gap.
Age-Based Financial Divides
The median economic difference between people in their early 30s and sixty-somethings grew by more than 100% in inflation-adjusted terms, from 135 thousand pounds in pre-financial crisis, to £310,000.
Regional Disparities
Furthermore, the study revealed significant area-based disparities, with the typical amount of assets in the pandemic period amounting to £290k in the southeastern region, where real estate values have typically increased quickly, versus £110,000 in the NE of England.
Health Crisis Years Impact
During the pandemic, when numerous employees were supported by the taxpayer-backed furlough scheme, and pandemic lockdowns reduced expenditure possibilities, the data shows countless homes were capable of accumulating, increasing their wealth.
Wealthier families performed significantly better, though. "The median home in the lowest-income quintile saw their available funds grow by only eighty pounds throughout the health crisis (2019-20 to 2021-22), roughly identical to the 24 months before COVID. Conversely, the median home in the highest income quintile saw their available funds grow by 4,200 pounds," the analysis concludes.
