According to fresh analysis, the average employee in the UK would have to work over five decades of earnings to achieve the financial standing of the richest 10% in the country.
Expanding Wealth Gap Over Time
The study analyzed wealth distribution data from the Covid pandemic period and determined that during the mid-2000s, it would have required 38 years' worth of median full-time earnings to enter the richest segment of the financial hierarchy.
A senior economist involved with the analysis stated: "Financial divides in Britain are presently so substantial that a typical full-time employee accumulating their complete salary throughout their career would still not be able to reach the top of the wealth ladder."
Assessing the Financial Disparity
The analysis revealed that the gap between the assets of the median citizen and an individual in the richest segment was £1m in 2006-08, but had expanded to £1.3m in inflation-adjusted terms by the pandemic years.
The economist continued: "These disparities are especially alarming as wealth mobility in Britain is limited – those who commence life wealthy tend to stay wealthy, and conversely applies."
Comparative Financial Divide
Although the financial disparity growing in absolute terms, the share of total wealth in the UK possessed by the wealthiest families – called "relative wealth inequality" – has been "broadly stable since the 1980s era," per the analysis.
Over this timeframe, total wealth in the UK increased dramatically from three times the annual GDP, to almost 7.5 times.
Contributors of Financial Divide
Termed "passive" increases, via increasing property values and variations in superannuation evaluations, were the key contributors of the expanding economic divide since 2010, as stated in the report.
These appreciations typically went to older, property-owning households, the research shows – intensifying the intergenerational wealth divide.
Intergenerational Wealth Disparities
The typical financial disparity between people in their early 30s and those in their early 60s grew by more than 100% in actual value, from £135k in the mid-2000s, to 310 thousand pounds.
Area-Based Disparities
Additionally, there were stark geographic differences, with the typical amount of wealth in 2020-22 reaching £290k in the southeastern region, where real estate values have typically increased quickly, compared with £110k in the northeastern region.
Pandemic Period Effects
Throughout the COVID period, when millions of workers were protected by the taxpayer-backed furlough scheme, and health crisis restrictions limited opportunities for spending, the data shows numerous families were able to save, growing their net worth.
Wealthier families fared much better, however. "The median home in the bottom income bracket saw their liquid savings rise by merely £80 over the pandemic period (from 2019 to 2022), broadly the same as the 24 months before COVID. Conversely, the average household in the wealthiest fifth saw their cash reserves grow by 4,200 pounds," the report finds.
