According to recent analysis, the median employee in the UK would require over five decades of salary to achieve the net worth of the most affluent 10% nationwide.
Widening Economic Disparity Over Time
The analysis examined net worth data including the Covid pandemic period and found that during the mid-2000s, it would have taken nearly four decades of average worker salary to enter the wealthiest decile of the wealth distribution.
A senior economist involved with the analysis stated: "Financial divides in Britain are now so large that a typical full-time employee accumulating their complete salary throughout their career would still not be able to attain the highest level of the economic scale."
Assessing the Wealth Divide
The analysis discovered that the disparity between the net worth of the typical individual and a person belonging to the wealthiest decile was one million pounds in 2006-08, but had widened to 1.3 million pounds in real terms by the pandemic years.
The analyst added: "These differences are doubly concerning as economic movement in Britain is restricted – those who commence life affluent tend to continue being rich, and conversely applies."
Comparative Financial Divide
Despite the financial disparity widening in actual numbers, the share of complete net worth in the UK owned by the wealthiest families – known as "relative wealth inequality" – has been "mostly consistent since the 1980s," per the analysis.
During this period, complete net worth in the UK surged from triple the annual GDP, to almost 7.5 times.
Drivers of Financial Divide
Termed "passive" gains, through growing real estate costs and variations in retirement fund assessments, were the primary factors of the growing financial disparity since 2010, per the study.
These gains generally flowed to senior citizens with real estate, the research shows – worsening the intergenerational wealth divide.
Age-Based Wealth Disparities
The average wealth gap between individuals aged 30-34 and people aged 60-64 increased over twofold in real terms, from £135k in the mid-2000s, to £310k.
Regional Differences
There were also stark regional variations, with the average level of net worth in 2020-22 standing at 290 thousand pounds in the SE of England, where housing costs have generally grown substantially, versus £110,000 in the NE of England.
COVID Era Consequences
During the pandemic, when countless laborers were covered under the government-supported job retention program, and Covid shutdowns limited opportunities for spending, the data shows numerous families were capable of accumulating, enhancing their financial standing.
Wealthier families fared much better, however. "The typical family in the lowest-income quintile saw their cash reserves rise by merely £80 over the pandemic period (across the pandemic timeframe), broadly the same as the 24 months before COVID. Conversely, the typical family in the highest income quintile saw their cash reserves increase by £4,200," the report finds.
