Per new analysis, the typical employee in the UK would have to work over five decades of income to reach the net worth of the richest 10% of the population.
Widening Wealth Gap Over Time
The analysis analyzed financial assets data covering the Covid pandemic period and determined that in the pre-financial crisis era, it would have taken 38 years of average worker salary to reach the top 10th of the economic ladder.
A senior economist involved with the study stated: "Financial divides in Britain are currently so significant that a average worker accumulating their complete salary during their working years would remain unable to achieve the peak of the economic scale."
Quantifying the Economic Gap
The study found that the disparity between the wealth of the median citizen and someone in the richest segment was one million pounds in 2006-08, but had increased to £1.3m in inflation-adjusted terms by recent times.
The economist continued: "These differences are especially alarming as financial progression in Britain is limited – individuals who begin life well-off tend to continue being rich, and vice versa."
Relative Wealth Inequality
Despite the financial disparity widening in actual numbers, the share of overall assets in the UK held by the most affluent homes – called "relative wealth inequality" – has been "largely unchanged since the 1980s," according to the study.
Throughout these years, total wealth in the UK rose substantially from triple the gross domestic product, to approximately 7.5x.
Drivers of Financial Divide
Termed "automatic" increases, via growing real estate costs and variations in superannuation evaluations, were the key contributors of the growing financial disparity since 2010, according to the report.
These gains typically went to older, property-owning households, the study demonstrates – exacerbating the intergenerational wealth divide.
Age-Based Economic Gaps
The average wealth gap between individuals aged 30-34 and people aged 60-64 increased over twofold in inflation-adjusted terms, from 135 thousand pounds in pre-financial crisis, to 310 thousand pounds.
Area-Based Disparities
Additionally, there were significant geographic differences, with the median value of wealth in 2020-22 reaching 290 thousand pounds in the southeastern region, where property prices have tended to rise rapidly, as opposed to £110k in the north-east.
Health Crisis Years Impact
Throughout the COVID period, when countless laborers were protected by the taxpayer-backed furlough scheme, and Covid shutdowns reduced expenditure possibilities, the statistics indicate countless homes were capable of accumulating, increasing their wealth.
Wealthier families fared much better, however. "The typical family in the lowest-income quintile saw their cash reserves grow by only eighty pounds during the COVID years (from 2019 to 2022), broadly the same as the pre-crisis period. Conversely, the average household in the wealthiest fifth saw their available funds rise by £4,200," the report finds.
