Per recent analysis, the median employee in the UK would have to work over five decades of earnings to achieve the wealth level of the wealthiest 10% nationwide.
Expanding Economic Disparity Over Time
The study examined wealth distribution data including the Covid pandemic period and discovered that back in the mid-2000s, it would have required nearly four decades of average worker salary to reach the wealthiest decile of the wealth distribution.
An economic expert part of the study observed: "Financial divides in Britain are presently so substantial that a regular employee saving all their earnings across their entire working life would remain unable to attain the highest level of the financial hierarchy."
Measuring the Economic Gap
The study found that the gap between the wealth of the average person and a person belonging to the top 10% was £1m in the pre-crisis period, but had increased to £1.3 million in inflation-adjusted terms by the pandemic years.
The analyst continued: "These disparities are doubly concerning as wealth mobility in Britain is low – people that start life well-off tend to remain affluent, and the opposite holds true."
Proportional Economic Disparity
Although the wealth gap expanding in specific figures, the portion of total wealth in the UK owned by the most affluent homes – known as "comparative financial divide" – has been "mostly consistent since the eighties," per the research.
During this period, total wealth in the UK surged from three times the yearly economic output, to almost 7.5 times.
Drivers of Financial Divide
So-called "unearned" appreciation, via increasing property values and adjustments to retirement fund assessments, were the main drivers of the growing financial disparity since 2010, as stated in the analysis.
These appreciations tended to accrue to elderly homeowners, the study demonstrates – intensifying the generational financial disparity.
Generational Economic Gaps
The average wealth gap between individuals aged 30-34 and people aged 60-64 grew by more than 100% in real terms, from £135k in the mid-2000s, to £310k.
Regional Differences
Additionally, there were stark area-based disparities, with the median value of net worth in recent years reaching £290,000 in the SE of England, where housing costs have typically increased quickly, versus 110 thousand pounds in the NE of England.
Health Crisis Years Consequences
Amid the health crisis, when millions of workers were covered under the public-funded employment protection, and Covid shutdowns limited opportunities for spending, the information reveals numerous families were capable of accumulating, enhancing their financial standing.
More affluent homes fared much better, nevertheless. "The typical family in the poorest fifth saw their liquid savings grow by only eighty pounds throughout the health crisis (2019-20 to 2021-22), approximately equivalent to the pre-crisis period. In contrast, the average household in the top income bracket saw their cash reserves increase by £4,200," the study reveals.
