According to recent analysis, the typical employee in the UK would require 52 years' worth of income to attain the wealth level of the richest 10% of the population.
Expanding Financial Divide Over Time
This research examined financial assets data from the recent health crisis years and found that back in the pre-financial crisis era, it would have taken nearly four decades of typical employment income to reach the wealthiest decile of the financial hierarchy.
A research lead part of the report commented: "Economic disparities in Britain are now so large that a regular employee saving all their earnings across their entire working life would continue to be incapable to attain the highest level of the wealth ladder."
Measuring the Economic Gap
The analysis revealed that the gap between the net worth of the median citizen and someone in the richest segment was £1 million in the mid-2000s, but had expanded to 1.3 million pounds in real terms by the pandemic years.
The economist continued: "These differences are doubly concerning as wealth mobility in Britain is low – those who commence life wealthy tend to remain affluent, and the opposite holds true."
Comparative Financial Divide
Even with the economic divide expanding in actual numbers, the share of total wealth in the UK possessed by the wealthiest families – called "relative wealth inequality" – has been "largely unchanged since the 1980s era," according to the study.
During this period, complete net worth in the UK rose substantially from triple the annual GDP, to almost 7.5 times.
Drivers of Economic Disparity
So-called "passive" gains, via rising house prices and variations in superannuation evaluations, were the main drivers of the widening wealth gap over the past decade, per the study.
These increases typically went to older, property-owning households, the study demonstrates – intensifying the age-based economic gap.
Generational Wealth Disparities
The typical financial disparity between people in their early 30s and sixty-somethings grew by more than 100% in real terms, from £135,000 in pre-financial crisis, to 310 thousand pounds.
Regional Disparities
Additionally, there were significant regional variations, with the median value of assets in the pandemic period reaching 290 thousand pounds in south-east England, where property prices have typically increased quickly, versus 110 thousand pounds in the NE of England.
Pandemic Period Effects
During the pandemic, when millions of workers were supported by the government-supported job retention program, and pandemic lockdowns curtailed consumption options, the statistics indicate countless homes were able to save, enhancing their financial standing.
Wealthier families performed significantly better, however. "The median home in the lowest-income quintile saw their cash reserves increase by just £80 throughout the health crisis (from 2019 to 2022), roughly identical to the two years pre-pandemic. In contrast, the median home in the highest income quintile saw their cash reserves grow by 4,200 pounds," the study reveals.
