🔗 Share this article

Based on recent research, the average earner in the UK would have to work over five decades of earnings to attain the financial standing of the most affluent 10% in the country.

Expanding Financial Divide Through the Years

The study examined wealth distribution information including the Covid pandemic period and discovered that back in the pre-financial crisis era, it would have taken 38 years' worth of average worker salary to reach the wealthiest decile of the economic ladder.

A senior economist associated with the study observed: "Economic disparities in Britain are presently so substantial that a average worker setting aside their entire income during their working years would remain unable to achieve the peak of the financial hierarchy."

Assessing the Wealth Divide

The study found that the disparity between the wealth of the typical individual and a person belonging to the richest segment was £1m in the pre-crisis period, but had widened to £1.3 million in actual value by the pandemic years.

The researcher continued: "These gaps are particularly worrying as wealth mobility in Britain is low – individuals who begin life affluent tend to remain affluent, and vice versa."

Relative Wealth Inequality

Even with the economic divide expanding in specific figures, the share of overall assets in the UK possessed by the most affluent homes – known as "comparative financial divide" – has been "mostly consistent since the 1980s era," per the research.

Over this timeframe, total wealth in the UK increased dramatically from three times the annual GDP, to almost 7.5 times.

Factors of Wealth Inequality

Termed "automatic" increases, through rising house prices and adjustments to retirement fund assessments, were the primary factors of the widening wealth gap over the past decade, as stated in the report.

These increases tended to accrue to elderly homeowners, the analysis reveals – worsening the generational financial disparity.

Intergenerational Wealth Disparities

The typical financial disparity between thirty-somethings and sixty-somethings increased over twofold in inflation-adjusted terms, from 135 thousand pounds in the mid-2000s, to £310k.

Geographic Differences

Furthermore, the study revealed significant regional variations, with the median value of net worth in 2020-22 standing at 290 thousand pounds in the southeastern region, where property prices have tended to rise rapidly, compared with £110,000 in the NE of England.

Pandemic Period Effects

Throughout the COVID period, when countless laborers were protected by the public-funded employment protection, and pandemic lockdowns curtailed consumption options, the data shows numerous families were able to save, growing their net worth.

More affluent homes achieved superior outcomes, however. "The median home in the lowest-income quintile saw their liquid savings rise by merely £80 throughout the health crisis (across the pandemic timeframe), roughly identical to the pre-crisis period. In contrast, the median home in the top income bracket saw their available funds rise by £4,200," the study reveals.