Per new research, the typical worker in the UK would require half a century of earnings to reach the wealth level of the richest 10% of the population.
Widening Wealth Gap Through the Years
The analysis examined wealth distribution data covering the Covid pandemic period and discovered that back in the pre-financial crisis era, it would have taken nearly four decades of median full-time earnings to reach the top 10th of the economic ladder.
A research lead associated with the analysis observed: "Economic disparities in Britain are now so large that a typical full-time employee accumulating their complete salary during their working years would continue to be incapable to attain the highest level of the financial hierarchy."
Quantifying the Economic Gap
The analysis discovered that the disparity between the net worth of the typical individual and an individual in the top 10% was £1 million in the mid-2000s, but had expanded to £1.3m in actual value by the pandemic years.
The economist added: "These differences are doubly concerning as economic movement in Britain is restricted – individuals who begin life affluent tend to remain affluent, and vice versa."
Relative Wealth Inequality
Even with the economic divide growing in specific figures, the percentage of complete net worth in the UK owned by the richest households – termed "relative wealth inequality" – has been "mostly consistent since the 1980s era," per the analysis.
Throughout these years, complete net worth in the UK increased dramatically from three times the annual GDP, to almost 7.5 times.
Drivers of Wealth Inequality
Referred to as "automatic" gains, via increasing property values and adjustments to pension valuations, were the key contributors of the growing financial disparity over the past decade, as stated in the study.
These increases generally flowed to elderly homeowners, the analysis reveals – exacerbating the intergenerational wealth divide.
Generational Financial Divides
The typical financial disparity between thirty-somethings and people aged 60-64 increased over twofold in actual value, from £135,000 in the mid-2000s, to 310 thousand pounds.
Geographic Differences
There were also significant geographic differences, with the average level of assets in the pandemic period reaching £290,000 in the southeastern region, where real estate values have typically increased quickly, compared with 110 thousand pounds in the north-east.
Health Crisis Years Impact
Throughout the COVID period, when millions of workers were protected by the taxpayer-backed furlough scheme, and pandemic lockdowns curtailed consumption options, the information reveals countless homes were able to save, increasing their wealth.
Higher-income households performed significantly better, though. "The average household in the poorest fifth saw their cash reserves increase by just £80 during the COVID years (across the pandemic timeframe), broadly the same as the 24 months before COVID. Conversely, the median home in the highest income quintile saw their cash reserves increase by £4,200," the study reveals.
