Based on new research, the typical employee in the UK would have to work half a century of earnings to achieve the net worth of the wealthiest 10% in the country.
Expanding Economic Disparity Through the Years
The analysis analyzed wealth distribution data covering the recent health crisis years and determined that during the mid-2000s, it would have taken 38 years' worth of median full-time earnings to enter the richest segment of the wealth distribution.
A research lead part of the analysis observed: "Wealth gaps in Britain are presently so substantial that a typical full-time employee setting aside their entire income during their working years would remain unable to reach the top of the financial hierarchy."
Assessing the Economic Gap
The study found that the difference between the wealth of the median citizen and a person belonging to the wealthiest decile was £1m in 2006-08, but had widened to 1.3 million pounds in real terms by 2020-22.
The economist further stated: "These differences are particularly worrying as economic movement in Britain is restricted – individuals who begin life well-off tend to remain affluent, and vice versa."
Relative Wealth Inequality
Despite the economic divide growing in actual numbers, the portion of total wealth in the UK held by the richest households – termed "relative wealth inequality" – has been "broadly stable since the 1980s era," according to the study.
Over this timeframe, total wealth in the UK surged from triple the gross domestic product, to approximately 7.5x.
Drivers of Wealth Inequality
So-called "unearned" increases, by means of growing real estate costs and changes in superannuation evaluations, were the primary factors of the expanding economic divide over the past decade, per the study.
These gains generally flowed to senior citizens with real estate, the analysis reveals – exacerbating the age-based economic gap.
Generational Financial Divides
The average wealth gap between individuals aged 30-34 and sixty-somethings grew by more than 100% in inflation-adjusted terms, from £135k in pre-financial crisis, to 310 thousand pounds.
Area-Based Variations
There were also significant area-based disparities, with the median value of wealth in 2020-22 standing at £290,000 in south-east England, where real estate values have generally grown substantially, compared with 110 thousand pounds in the north-east.
COVID Era Effects
Amid the health crisis, when numerous employees were protected by the government-supported job retention program, and pandemic lockdowns reduced expenditure possibilities, the data shows numerous families were capable of accumulating, enhancing their financial standing.
Higher-income households fared much better, nevertheless. "The typical family in the poorest fifth saw their liquid savings rise by merely £80 throughout the health crisis (across the pandemic timeframe), broadly the same as the 24 months before COVID. Conversely, the typical family in the top income bracket saw their liquid savings grow by 4,200 pounds," the study reveals.
