The average British worker would need to save more than a lifetime’s worth of earnings to become wealthy, fresh analysis has revealed.
The ever-widening wealth gap means it would take £1.3m – around 52 years’ worth of average earnings – to jump from the middle to the top of wealth distribution.
This is over a decade longer than in 2006-2008, where it would have taken 38 years’ worth of typical full-time earnings to rise from the fifth to the tenth decile of wealth distribution.
The new research from the Resolution Foundation pinned the blame largely on soaring asset prices, with many of the country’s wealthiest gaining from passive investment. This accounted for 60 per cent of the total rise in average family wealth between 2018 and 2022, as opposed to actively saving.
“Saving alone is no longer enough to shift a household’s position in the distribution,” the report said, as it outlined a “highly unequal and harder to climb” wealth landscape.
On the flip end many low-income families were hit with a sharp deterioration in their finances.
One in ten families in the bottom fifth experienced a £4,000 or more fall in assets that can be quickly turned into cash. This was double the drop in the two years before the pandemic.
According to figures from the Office for National Statistics (ONS) used in the report, household wealth topped £17tn in 2020-2022, with 32 per cent held in property and 8.2 per cent trapped in pensions.
London leads on wealth inequality
The think tank said: “The stability of key measures of UK wealth inequality over recent decades masks a significant widening of absolute wealth gaps.
“These gains have flowed disproportionately to older, asset-rich households and homeowners in certain regions – particularly London.”
The UK’s capital was hit with the “sharpest rise in equality” since 2006, driven by “rapid house price growth in a region where property wealth is more unevenly distributed than anywhere else in Britain”.
Real-term house prices surged to £530,000 in March 2022, up from £360,000 in July 2006.
The report cited an extreme concentration of wealth with families in the 90th percentile holding 12 times more wealth than the median family.
Still, despite the concentration London had the lowest median wealth per adult of all regions, sitting at just £80,000.