Per recent study, the median employee in the UK would require half a century of salary to attain the financial standing of the wealthiest 10% of the population.
Growing Financial Divide Through the Years
This research reviewed wealth distribution information covering the recent health crisis years and determined that back in the pre-financial crisis era, it would have taken 38 years of median full-time earnings to reach the wealthiest decile of the wealth distribution.
A senior economist associated with the study observed: "Financial divides in Britain are currently so significant that a average worker accumulating their complete salary across their entire working life would still not be able to achieve the peak of the financial hierarchy."
Assessing the Wealth Divide
The study revealed that the difference between the net worth of the average person and a person belonging to the wealthiest decile was one million pounds in the pre-crisis period, but had expanded to 1.3 million pounds in actual value by recent times.
The analyst continued: "These gaps are doubly concerning as financial progression in Britain is restricted – individuals who begin life wealthy tend to continue being rich, and conversely applies."
Proportional Economic Disparity
Despite the wealth gap widening in actual numbers, the share of overall assets in the UK held by the wealthiest families – called "relative wealth inequality" – has been "broadly stable since the 1980s," per the analysis.
During this period, overall assets in the UK increased dramatically from thrice the gross domestic product, to nearly seven and a half times.
Contributors of Financial Divide
So-called "passive" gains, via growing real estate costs and changes in retirement fund assessments, were the key contributors of the growing financial disparity over the past decade, as stated in the analysis.
These increases generally flowed to older, property-owning households, the analysis reveals – worsening the generational financial disparity.
Generational Wealth Disparities
The median economic difference between thirty-somethings and sixty-somethings grew by more than 100% in real terms, from 135 thousand pounds in the mid-2000s, to 310 thousand pounds.
Geographic Disparities
Furthermore, the study revealed pronounced regional variations, with the average level of net worth in recent years standing at £290,000 in the southeastern region, where housing costs have tended to rise rapidly, versus £110,000 in the north-east.
COVID Era Consequences
Amid the health crisis, when millions of workers were protected by the taxpayer-backed furlough scheme, and Covid shutdowns limited opportunities for spending, the data shows numerous families were capable of accumulating, growing their net worth.
Higher-income households fared much better, though. "The average household in the lowest-income quintile saw their available funds rise by merely £80 throughout the health crisis (across the pandemic timeframe), roughly identical to the 24 months before COVID. Conversely, the average household in the wealthiest fifth saw their cash reserves increase by £4,200," the analysis concludes.
