Per recent study, the average earner in the UK would have to work 52 years' worth of earnings to reach the financial standing of the most affluent 10% nationwide.
Widening Financial Divide Across Decades
The study analyzed net worth information including the recent health crisis years and discovered that in the pre-financial crisis era, it would have required nearly four decades of average worker salary to join the wealthiest decile of the economic ladder.
A research lead part of the study observed: "Financial divides in Britain are now so large that a average worker accumulating their complete salary across their entire working life would still not be able to achieve the peak of the wealth ladder."
Assessing the Financial Disparity
The analysis revealed that the disparity between the wealth of the average person and someone in the wealthiest decile was £1m in 2006-08, but had expanded to 1.3 million pounds in inflation-adjusted terms by recent times.
The analyst further stated: "These differences are doubly concerning as financial progression in Britain is limited – people that start life wealthy tend to stay wealthy, and the opposite holds true."
Relative Wealth Inequality
Although the economic divide widening in actual numbers, the percentage of complete net worth in the UK owned by the wealthiest families – called "proportional economic disparity" – has been "largely unchanged since the 1980s," according to the analysis.
During this period, complete net worth in the UK surged from thrice the gross domestic product, to approximately 7.5x.
Drivers of Wealth Inequality
Termed "unearned" appreciation, via increasing property values and changes in pension valuations, were the key contributors of the growing financial disparity since 2010, as stated in the study.
These gains generally flowed to older, property-owning households, the research shows – exacerbating the generational financial disparity.
Intergenerational Wealth Disparities
The typical financial disparity between people in their early 30s and sixty-somethings more than doubled in real terms, from 135 thousand pounds in pre-financial crisis, to £310k.
Regional Differences
Additionally, there were pronounced area-based disparities, with the typical amount of wealth in 2020-22 standing at 290 thousand pounds in the southeastern region, where property prices have typically increased quickly, versus £110,000 in the NE of England.
Pandemic Period Consequences
During the pandemic, when millions of workers were supported by the government-supported job retention program, and Covid shutdowns curtailed consumption options, the information reveals many households were able to save, growing their net worth.
Higher-income households fared much better, though. "The typical family in the lowest-income quintile saw their liquid savings rise by merely £80 throughout the health crisis (from 2019 to 2022), approximately equivalent to the 24 months before COVID. Conversely, the median home in the highest income quintile saw their liquid savings rise by £4,200," the study reveals.
