According to new analysis, the median earner in the UK would need over five decades of earnings to attain the net worth of the most affluent 10% of the population.
Expanding Economic Disparity Across Decades
The analysis examined wealth distribution data including the Covid pandemic period and discovered that in the pre-financial crisis era, it would have taken 38 years' worth of average worker salary to enter the wealthiest decile of the economic ladder.
An economic expert involved with the report commented: "Wealth gaps in Britain are currently so significant that a regular employee setting aside their entire income during their working years would remain unable to attain the highest level of the financial hierarchy."
Quantifying the Wealth Divide
The study found that the gap between the net worth of the average person and a person belonging to the top 10% was £1m in 2006-08, but had expanded to 1.3 million pounds in real terms by the pandemic years.
The economist further stated: "These gaps are doubly concerning as wealth mobility in Britain is limited – those who commence life wealthy tend to continue being rich, and conversely applies."
Relative Wealth Inequality
Despite the financial disparity widening in specific figures, the percentage of complete net worth in the UK held by the wealthiest families – called "proportional economic disparity" – has been "mostly consistent since the eighties," as stated in the analysis.
During this period, total wealth in the UK surged from three times the annual GDP, to approximately 7.5x.
Contributors of Wealth Inequality
So-called "unearned" gains, via increasing property values and variations in retirement fund assessments, were the key contributors of the widening wealth gap since 2010, per the analysis.
These increases generally flowed to elderly homeowners, the study demonstrates – intensifying the intergenerational wealth divide.
Age-Based Wealth Disparities
The median economic difference between thirty-somethings and people aged 60-64 more than doubled in actual value, from £135k in 2006-08, to £310k.
Geographic Variations
There were also pronounced geographic differences, with the median value of wealth in 2020-22 reaching £290k in the SE of England, where property prices have generally grown substantially, as opposed to £110,000 in the NE of England.
Health Crisis Years Effects
Amid the health crisis, when millions of workers were protected by the public-funded employment protection, and pandemic lockdowns reduced expenditure possibilities, the statistics indicate numerous families were able to save, enhancing their financial standing.
Higher-income households achieved superior outcomes, nevertheless. "The median home in the poorest fifth saw their liquid savings grow by only eighty pounds during the COVID years (across the pandemic timeframe), broadly the same as the two years pre-pandemic. Conversely, the median home in the top income bracket saw their cash reserves increase by £4,200," the analysis concludes.
