Based on new analysis, the typical employee in the UK would need half a century of income to reach the financial standing of the wealthiest 10% in the country.
Widening Wealth Gap Across Decades
This research examined financial assets information from the recent health crisis years and determined that during 2006-08, it would have taken 38 years of median full-time earnings to reach the top 10th of the financial hierarchy.
A senior economist involved with the analysis commented: "Economic disparities in Britain are currently so significant that a average worker accumulating their complete salary during their working years would continue to be incapable to reach the top of the economic scale."
Quantifying the Economic Gap
The analysis found that the gap between the assets of the median citizen and someone in the richest segment was £1m in the pre-crisis period, but had widened to £1.3 million in real terms by the pandemic years.
The economist continued: "These gaps are especially alarming as economic movement in Britain is low – those who commence life affluent tend to stay wealthy, and the opposite holds true."
Comparative Financial Divide
Even with the wealth gap expanding in actual numbers, the portion of complete net worth in the UK possessed by the most affluent homes – termed "proportional economic disparity" – has been "broadly stable since the 1980s," per the analysis.
Over this timeframe, total wealth in the UK increased dramatically from triple the yearly economic output, to nearly seven and a half times.
Contributors of Economic Disparity
So-called "passive" appreciation, by means of rising house prices and variations in retirement fund assessments, were the main drivers of the growing financial disparity over the past decade, according to the report.
These gains generally flowed to elderly homeowners, the study demonstrates – exacerbating the intergenerational wealth divide.
Generational Wealth Disparities
The typical financial disparity between individuals aged 30-34 and sixty-somethings more than doubled in real terms, from 135 thousand pounds in 2006-08, to £310k.
Geographic Disparities
There were also stark regional variations, with the median value of net worth in 2020-22 reaching 290 thousand pounds in the southeastern region, where housing costs have generally grown substantially, versus £110,000 in the north-east.
Pandemic Period Impact
During the pandemic, when millions of workers were protected by the government-supported job retention program, and health crisis restrictions curtailed consumption options, the data shows many households were in a position to set aside money, enhancing their financial standing.
More affluent homes performed significantly better, however. "The median home in the poorest fifth saw their liquid savings grow by only eighty pounds over the pandemic period (across the pandemic timeframe), approximately equivalent to the 24 months before COVID. On the other hand, the average household in the top income bracket saw their liquid savings increase by £4,200," the analysis concludes.
