According to fresh study, the average worker in the UK would have to work half a century of earnings to achieve the net worth of the richest 10% nationwide.
Expanding Wealth Gap Over Time
The analysis examined net worth information from the Covid pandemic period and found that back in 2006-08, it would have needed 38 years of average worker salary to join the top 10th of the wealth distribution.
A senior economist involved with the report stated: "Wealth gaps in Britain are presently so substantial that a average worker saving all their earnings across their entire working life would remain unable to attain the highest level of the wealth ladder."
Assessing the Economic Gap
The research discovered that the disparity between the net worth of the typical individual and someone in the wealthiest decile was £1m in the mid-2000s, but had widened to 1.3 million pounds in actual value by 2020-22.
The researcher continued: "These disparities are particularly worrying as wealth mobility in Britain is restricted – people that start life affluent tend to stay wealthy, and vice versa."
Relative Wealth Inequality
Even with the economic divide widening in absolute terms, the portion of complete net worth in the UK possessed by the most affluent homes – known as "proportional economic disparity" – has been "largely unchanged since the 1980s era," as stated in the study.
Throughout these years, total wealth in the UK surged from triple the annual GDP, to nearly seven and a half times.
Drivers of Economic Disparity
Referred to as "passive" appreciation, via growing real estate costs and variations in retirement fund assessments, were the main drivers of the widening wealth gap over the past decade, as stated in the study.
These appreciations tended to accrue to senior citizens with real estate, the analysis reveals – exacerbating the intergenerational wealth divide.
Generational Wealth Disparities
The typical financial disparity between thirty-somethings and sixty-somethings increased over twofold in real terms, from £135,000 in pre-financial crisis, to 310 thousand pounds.
Area-Based Disparities
Additionally, there were stark regional variations, with the median value of net worth in 2020-22 standing at £290,000 in the southeastern region, where real estate values have generally grown substantially, versus £110k in the NE of England.
COVID Era Impact
Amid the health crisis, when millions of workers were supported by the public-funded employment protection, and health crisis restrictions limited opportunities for spending, the statistics indicate many households were in a position to set aside money, growing their net worth.
Wealthier families fared much better, though. "The typical family in the lowest-income quintile saw their available funds increase by just £80 throughout the health crisis (from 2019 to 2022), approximately equivalent to the 24 months before COVID. On the other hand, the median home in the wealthiest fifth saw their liquid savings increase by £4,200," the report finds.
