Based on fresh analysis, the average worker in the UK would require over five decades of income to attain the net worth of the richest 10% nationwide.
Widening Wealth Gap Across Decades
The study reviewed net worth statistics from the Covid pandemic period and determined that back in the mid-2000s, it would have taken nearly four decades of typical employment income to join the wealthiest decile of the economic ladder.
A research lead part of the report stated: "Wealth gaps in Britain are now so large that a average worker setting aside their entire income across their entire working life would continue to be incapable to attain the highest level of the wealth ladder."
Quantifying the Wealth Divide
The analysis revealed that the disparity between the assets of the median citizen and someone in the wealthiest decile was one million pounds in the mid-2000s, but had expanded to 1.3 million pounds in inflation-adjusted terms by the pandemic years.
The economist further stated: "These differences are especially alarming as wealth mobility in Britain is low – people that start life well-off tend to continue being rich, and vice versa."
Relative Wealth Inequality
Despite the wealth gap growing in absolute terms, the percentage of total wealth in the UK possessed by the most affluent homes – called "relative wealth inequality" – has been "broadly stable since the 1980s era," as stated in the analysis.
During this period, total wealth in the UK surged from three times the gross domestic product, to almost 7.5 times.
Contributors of Wealth Inequality
So-called "unearned" gains, by means of growing real estate costs and variations in pension valuations, were the main drivers of the expanding economic divide since 2010, as stated in the study.
These gains typically went to senior citizens with real estate, the research shows – worsening the intergenerational wealth divide.
Intergenerational Financial Divides
The median economic difference between people in their early 30s and sixty-somethings more than doubled in inflation-adjusted terms, from 135 thousand pounds in 2006-08, to £310k.
Area-Based Disparities
Additionally, there were significant regional variations, with the average level of assets in 2020-22 reaching 290 thousand pounds in the SE of England, where real estate values have typically increased quickly, as opposed to £110,000 in the north-east.
COVID Era Impact
During the pandemic, when millions of workers were covered under the government-supported job retention program, and Covid shutdowns reduced expenditure possibilities, the statistics indicate countless homes were capable of accumulating, growing their net worth.
Higher-income households fared much better, however. "The median home in the lowest-income quintile saw their cash reserves rise by merely £80 during the COVID years (from 2019 to 2022), roughly identical to the 24 months before COVID. Conversely, the typical family in the wealthiest fifth saw their cash reserves increase by £4,200," the report finds.
