Per fresh study, the median employee in the UK would require half a century of salary to reach the financial standing of the wealthiest 10% of the population.
Growing Economic Disparity Over Time
The study analyzed wealth distribution statistics including the recent health crisis years and found that during 2006-08, it would have required nearly four decades of average worker salary to join the top 10th of the wealth distribution.
A senior economist involved with the analysis observed: "Financial divides in Britain are presently so substantial that a average worker saving all their earnings across their entire working life would remain unable to achieve the peak of the economic scale."
Quantifying the Wealth Divide
The study revealed that the disparity between the wealth of the typical individual and an individual in the richest segment was one million pounds in the pre-crisis period, but had increased to £1.3 million in inflation-adjusted terms by the pandemic years.
The economist added: "These differences are doubly concerning as financial progression in Britain is limited – those who commence life well-off tend to remain affluent, and conversely applies."
Comparative Financial Divide
Despite the economic divide widening in specific figures, the portion of total wealth in the UK held by the richest households – known as "comparative financial divide" – has been "broadly stable since the 1980s era," as stated in the analysis.
Over this timeframe, overall assets in the UK surged from triple the annual GDP, to approximately 7.5x.
Drivers of Wealth Inequality
So-called "unearned" appreciation, by means of growing real estate costs and adjustments to pension valuations, were the key contributors of the widening wealth gap since 2010, as stated in the report.
These appreciations typically went to older, property-owning households, the study demonstrates – exacerbating the intergenerational wealth divide.
Generational Financial Divides
The median economic difference between individuals aged 30-34 and people aged 60-64 increased over twofold in actual value, from £135k in 2006-08, to 310 thousand pounds.
Area-Based Disparities
There were also significant area-based disparities, with the average level of net worth in the pandemic period amounting to 290 thousand pounds in the southeastern region, where real estate values have generally grown substantially, as opposed to £110,000 in the north-east.
Pandemic Period Consequences
Throughout the COVID period, when numerous employees were protected by the government-supported job retention program, and health crisis restrictions reduced expenditure possibilities, the data shows countless homes were able to save, enhancing their financial standing.
More affluent homes achieved superior outcomes, nevertheless. "The typical family in the lowest-income quintile 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. In contrast, the median home in the top income bracket saw their cash reserves grow by 4,200 pounds," the analysis concludes.
