According to new analysis, the median earner in the UK would have to work over five decades of salary to reach the financial standing of the richest 10% of the population.
Growing Wealth Gap Across Decades
This research analyzed financial assets data from the Covid pandemic period and found that back in the pre-financial crisis era, it would have taken 38 years' worth of typical employment income to reach the top 10th of the financial hierarchy.
A senior economist involved with the study stated: "Wealth gaps in Britain are presently so substantial that a regular employee saving all their earnings during their working years would remain unable to reach the top of the economic scale."
Measuring the Wealth Divide
The research found that the difference between the assets of the average person and someone in the wealthiest decile was one million pounds in the mid-2000s, but had increased to £1.3m in real terms by recent times.
The researcher continued: "These differences are especially alarming as wealth mobility in Britain is restricted – people that start life wealthy tend to continue being rich, and conversely applies."
Proportional Economic Disparity
Despite the economic divide growing in specific figures, the percentage of total wealth in the UK held by the wealthiest families – known as "proportional economic disparity" – has been "mostly consistent since the eighties," according to the analysis.
Over this timeframe, overall assets in the UK increased dramatically from thrice the annual GDP, to approximately 7.5x.
Factors of Wealth Inequality
So-called "unearned" appreciation, via rising house prices and variations in pension valuations, were the primary factors of the widening wealth gap from 2010 onward, per the analysis.
These gains tended to accrue to senior citizens with real estate, the study demonstrates – exacerbating the age-based economic gap.
Intergenerational Economic Gaps
The typical financial disparity between individuals aged 30-34 and those in their early 60s more than doubled in inflation-adjusted terms, from £135,000 in pre-financial crisis, to 310 thousand pounds.
Regional Disparities
Additionally, there were pronounced area-based disparities, with the average level of wealth in recent years reaching £290,000 in the southeastern region, where real estate values have tended to rise rapidly, as opposed to £110,000 in the NE of England.
Pandemic Period Impact
During the pandemic, when numerous employees were supported by the taxpayer-backed furlough scheme, and pandemic lockdowns reduced expenditure possibilities, the information reveals numerous families were able to save, enhancing their financial standing.
More affluent homes fared much better, though. "The median home in the poorest fifth saw their liquid savings grow by only eighty pounds throughout the health crisis (from 2019 to 2022), roughly identical to the pre-crisis period. Conversely, the typical family in the top income bracket saw their liquid savings increase by £4,200," the report finds.
