According to recent analysis, the typical earner in the UK would need half a century of salary to reach the financial standing of the wealthiest 10% of the population.
Growing Financial Divide Through the Years
The analysis reviewed net worth information including the recent health crisis years and determined that in 2006-08, it would have taken 38 years of median full-time earnings to reach the wealthiest decile of the wealth distribution.
A senior economist involved with the study observed: "Wealth gaps in Britain are now so large that a average worker setting aside their entire income throughout their career would remain unable to attain the highest level of the wealth ladder."
Measuring the Financial Disparity
The study discovered that the difference between the net worth of the typical individual and someone in the top 10% was £1 million in 2006-08, but had increased to £1.3 million in inflation-adjusted terms by recent times.
The researcher added: "These disparities are doubly concerning as economic movement in Britain is low – individuals who begin life wealthy tend to continue being rich, and the opposite holds true."
Relative Wealth Inequality
Even with the wealth gap widening in absolute terms, the share of complete net worth in the UK held by the richest households – known as "relative wealth inequality" – has been "broadly stable since the 1980s era," as stated in the research.
Throughout these years, total wealth in the UK rose substantially from triple the annual GDP, to nearly seven and a half times.
Factors of Wealth Inequality
So-called "unearned" increases, via increasing property values and variations in retirement fund assessments, were the main drivers of the expanding economic divide over the past decade, as stated in the report.
These increases tended to accrue to elderly homeowners, the study demonstrates – exacerbating the intergenerational wealth divide.
Intergenerational Economic Gaps
The typical financial disparity between individuals aged 30-34 and people aged 60-64 more than doubled in inflation-adjusted terms, from 135 thousand pounds in pre-financial crisis, to 310 thousand pounds.
Geographic Differences
There were also stark area-based disparities, with the median value of wealth in 2020-22 standing at 290 thousand pounds in the southeastern region, where property prices have typically increased quickly, versus 110 thousand pounds in the NE of England.
COVID Era Consequences
Throughout the COVID period, when numerous employees were covered under the taxpayer-backed furlough scheme, and health crisis restrictions reduced expenditure possibilities, the data shows countless homes were in a position to set aside money, growing their net worth.
Higher-income households performed significantly better, however. "The average household in the lowest-income quintile saw their available funds grow by only eighty pounds during the COVID years (from 2019 to 2022), approximately equivalent to the two years pre-pandemic. Conversely, the median home in the wealthiest fifth saw their liquid savings grow by 4,200 pounds," the report finds.
