According to new study, the typical worker in the UK would need over five decades of income to achieve the financial standing of the richest 10% in the country.
Widening Economic Disparity Across Decades
The study examined wealth distribution statistics including the recent health crisis years and discovered that during the pre-financial crisis era, it would have required nearly four decades of median full-time earnings to join the richest segment of the wealth distribution.
An economic expert part of the study commented: "Wealth gaps in Britain are now so large that a regular employee setting aside their entire income during their working years would remain unable to reach the top of the financial hierarchy."
Assessing the Wealth Divide
The analysis revealed that the disparity between the net worth of the average person and an individual in the richest segment was one million pounds in 2006-08, but had widened to £1.3 million in inflation-adjusted terms by the pandemic years.
The economist added: "These differences are doubly concerning as wealth mobility in Britain is limited – those who commence life well-off tend to continue being rich, and the opposite holds true."
Relative Wealth Inequality
Even with the economic divide growing in absolute terms, the percentage of total wealth in the UK possessed by the wealthiest families – known as "comparative financial divide" – has been "largely unchanged since the 1980s era," as stated in the analysis.
Over this timeframe, total wealth in the UK increased dramatically from triple the gross domestic product, to nearly seven and a half times.
Contributors of Wealth Inequality
Referred to as "automatic" gains, through rising house prices and changes in superannuation evaluations, were the main drivers of the expanding economic divide since 2010, per the analysis.
These appreciations generally flowed to elderly homeowners, the analysis reveals – worsening the generational financial disparity.
Generational Financial Divides
The median economic difference between individuals aged 30-34 and sixty-somethings grew by more than 100% in inflation-adjusted terms, from 135 thousand pounds in pre-financial crisis, to £310k.
Geographic Disparities
Furthermore, the study revealed stark area-based disparities, with the median value of wealth in recent years standing at 290 thousand pounds in the SE of England, where housing costs have tended to rise rapidly, versus £110,000 in the NE of England.
COVID Era Impact
Amid the health crisis, when millions of workers were supported by the public-funded employment protection, and pandemic lockdowns limited opportunities for spending, the data shows countless homes were capable of accumulating, increasing their wealth.
Wealthier families fared much better, however. "The median home in the poorest fifth saw their liquid savings increase by just £80 during the COVID years (from 2019 to 2022), approximately equivalent to the 24 months before COVID. Conversely, the median home in the wealthiest fifth saw their cash reserves grow by 4,200 pounds," the report finds.
