Based on recent study, the average earner in the UK would require over five decades of salary to reach the net worth of the richest 10% in the country.
Expanding Wealth Gap Over Time
The analysis reviewed wealth distribution statistics from the recent health crisis years and found that during the pre-financial crisis era, it would have needed nearly four decades of average worker salary to enter the top 10th of the wealth distribution.
A research lead involved with the report observed: "Wealth gaps in Britain are now so large that a typical full-time employee accumulating their complete salary throughout their career would remain unable to reach the top of the economic scale."
Measuring the Financial Disparity
The analysis revealed that the difference between the wealth of the average person and an individual in the richest segment was £1 million in the pre-crisis period, but had widened to £1.3m in real terms by 2020-22.
The researcher added: "These differences are particularly worrying as wealth mobility in Britain is restricted – individuals who begin life well-off tend to continue being rich, and the opposite holds true."
Comparative Financial Divide
Despite the financial disparity expanding in actual numbers, the share of overall assets in the UK held by the wealthiest families – termed "relative wealth inequality" – has been "largely unchanged since the 1980s era," as stated in the study.
Throughout these years, total wealth in the UK surged from three times the yearly economic output, to nearly seven and a half times.
Factors of Wealth Inequality
So-called "unearned" appreciation, via increasing property values and variations in superannuation evaluations, were the primary factors of the widening wealth gap from 2010 onward, per the study.
These gains tended to accrue to elderly homeowners, the research shows – intensifying the age-based economic gap.
Intergenerational Wealth Disparities
The average wealth gap between thirty-somethings and those in their early 60s increased over twofold in inflation-adjusted terms, from £135k in the mid-2000s, to £310,000.
Geographic Variations
Additionally, there were stark area-based disparities, with the typical amount of net worth in recent years amounting to £290k in the southeastern region, where property prices have tended to rise rapidly, as opposed to £110,000 in the northeastern region.
Pandemic Period Consequences
Throughout the COVID period, when numerous employees were supported by the public-funded employment protection, and pandemic lockdowns curtailed consumption options, the statistics indicate many households were in a position to set aside money, increasing their wealth.
Higher-income households achieved superior outcomes, though. "The typical family in the lowest-income quintile saw their cash reserves grow by only eighty pounds during the COVID years (2019-20 to 2021-22), approximately equivalent to the two years pre-pandemic. Conversely, the average household in the wealthiest fifth saw their cash reserves grow by 4,200 pounds," the report finds.
