Per new study, the typical employee in the UK would require 52 years' worth of income to attain the financial standing of the richest 10% of the population.
Widening Wealth Gap Across Decades
The study examined financial assets statistics covering the recent health crisis years and discovered that during the mid-2000s, it would have needed nearly four decades of average worker salary to join the wealthiest decile of the wealth distribution.
A research lead part of the study observed: "Economic disparities in Britain are now so large that a average worker accumulating their complete salary throughout their career would remain unable to attain the highest level of the financial hierarchy."
Quantifying the Financial Disparity
The analysis revealed that the gap between the net worth of the average person and a person belonging to the richest segment was £1m in the mid-2000s, but had expanded to £1.3 million in real terms by recent times.
The analyst further stated: "These disparities are especially alarming as financial progression in Britain is restricted – people that start life well-off tend to remain affluent, and vice versa."
Comparative Financial Divide
Although the financial disparity growing in actual numbers, the share of complete net worth in the UK held by the most affluent homes – called "relative wealth inequality" – has been "mostly consistent since the 1980s," per the research.
Throughout these years, total wealth in the UK surged from three times the yearly economic output, to approximately 7.5x.
Contributors of Economic Disparity
Termed "passive" gains, via rising house prices and variations in retirement fund assessments, were the key contributors of the growing financial disparity from 2010 onward, per the analysis.
These increases tended to accrue to senior citizens with real estate, the research shows – worsening the intergenerational wealth divide.
Generational Economic Gaps
The median economic difference between people in their early 30s and sixty-somethings more than doubled in inflation-adjusted terms, from 135 thousand pounds in pre-financial crisis, to 310 thousand pounds.
Geographic Differences
There were also significant area-based disparities, with the median value of net worth in 2020-22 reaching £290,000 in the southeastern region, where real estate values have tended to rise rapidly, as opposed to 110 thousand pounds in the northeastern region.
COVID Era Impact
Amid the health crisis, when numerous employees were covered under the government-supported job retention program, and Covid shutdowns limited opportunities for spending, the data shows many households were in a position to set aside money, growing their net worth.
Higher-income households achieved superior outcomes, though. "The average household in the bottom income bracket saw their cash reserves increase by just £80 over the pandemic period (from 2019 to 2022), approximately equivalent to the 24 months before COVID. In contrast, the typical family in the highest income quintile saw their liquid savings grow by 4,200 pounds," the report finds.
