According to new research, the typical worker in the UK would need over five decades of salary to achieve the financial standing of the most affluent 10% of the population.
Growing Wealth Gap Across Decades
The analysis examined net worth data including the Covid pandemic period and determined that in the mid-2000s, it would have required 38 years of typical employment income to join the top 10th of the wealth distribution.
A research lead involved with the report observed: "Wealth gaps in Britain are currently so significant that a typical full-time employee accumulating their complete salary across their entire working life would still not be able to reach the top of the economic scale."
Assessing the Economic Gap
The study revealed that the gap between the wealth of the median citizen and an individual in the top 10% was £1 million in the pre-crisis period, but had expanded to £1.3m in real terms by the pandemic years.
The researcher added: "These differences are especially alarming as wealth mobility in Britain is low – those who commence life affluent tend to continue being rich, and the opposite holds true."
Comparative Financial Divide
Despite the economic divide widening in specific figures, the percentage of total wealth in the UK owned by the wealthiest families – termed "proportional economic disparity" – has been "mostly consistent since the 1980s era," per the research.
Over this timeframe, complete net worth in the UK increased dramatically from thrice the annual GDP, to almost 7.5 times.
Contributors of Wealth Inequality
So-called "automatic" increases, through increasing property values and adjustments to pension valuations, were the primary factors of the widening wealth gap from 2010 onward, as stated in the analysis.
These gains typically went to older, property-owning households, the study demonstrates – worsening the intergenerational wealth divide.
Intergenerational Wealth Disparities
The typical financial disparity between people in their early 30s and people aged 60-64 increased over twofold in real terms, from £135,000 in pre-financial crisis, to £310k.
Geographic Variations
There were also pronounced area-based disparities, with the median value of assets in recent years reaching £290,000 in the SE of England, where real estate values have generally grown substantially, versus £110k in the NE of England.
Health Crisis Years Consequences
During the pandemic, when numerous employees were covered under the public-funded employment protection, and Covid shutdowns curtailed consumption options, the statistics indicate numerous families were capable of accumulating, increasing their wealth.
Higher-income households performed significantly better, however. "The median home in the poorest fifth saw their cash reserves increase by just £80 throughout the health crisis (2019-20 to 2021-22), approximately equivalent to the pre-crisis period. On the other hand, the typical family in the wealthiest fifth saw their liquid savings grow by 4,200 pounds," the analysis concludes.
