Based on new analysis, the median earner in the UK would have to work over five decades of salary to achieve the financial standing of the most affluent 10% in the country.
Widening Wealth Gap Through the Years
The study reviewed wealth distribution data from the recent health crisis years and determined that in the pre-financial crisis era, it would have needed 38 years of median full-time earnings to reach the top 10th of the economic ladder.
A research lead part of the report observed: "Wealth gaps in Britain are now so large that a regular employee saving all their earnings across their entire working life would remain unable to reach the top of the financial hierarchy."
Assessing the Economic Gap
The analysis discovered that the disparity between the net worth of the typical individual and an individual in the wealthiest decile was one million pounds in the mid-2000s, but had widened to £1.3 million in real terms by 2020-22.
The analyst continued: "These disparities are especially alarming as economic movement in Britain is low – people that start life wealthy tend to continue being rich, and conversely applies."
Relative Wealth Inequality
Despite the economic divide widening in actual numbers, the percentage of total wealth in the UK possessed by the most affluent homes – termed "relative wealth inequality" – has been "broadly stable since the eighties," as stated in the research.
Throughout these years, complete net worth in the UK rose substantially from thrice the gross domestic product, to approximately 7.5x.
Drivers of Financial Divide
Termed "passive" gains, by means of rising house prices and changes in superannuation evaluations, were the primary factors of the widening wealth gap from 2010 onward, according to the report.
These appreciations tended to accrue to older, property-owning households, the research shows – exacerbating the intergenerational wealth divide.
Intergenerational Wealth Disparities
The typical financial disparity between individuals aged 30-34 and people aged 60-64 more than doubled in inflation-adjusted terms, from £135,000 in the mid-2000s, to £310k.
Geographic Differences
There were also significant regional variations, with the typical amount of wealth in recent years standing at £290,000 in south-east England, where property prices have generally grown substantially, as opposed to £110k in the northeastern region.
Pandemic Period Impact
Throughout the COVID period, when numerous employees were covered under the government-supported job retention program, and Covid shutdowns curtailed consumption options, the data shows countless homes were capable of accumulating, increasing their wealth.
Higher-income households fared much better, however. "The typical family in the lowest-income quintile saw their cash reserves rise by merely £80 over the pandemic period (across the pandemic timeframe), roughly identical to the two years pre-pandemic. On the other hand, the typical family in the highest income quintile saw their liquid savings increase by £4,200," the study reveals.
