Based on new research, the typical earner in the UK would have to work over five decades of earnings to attain the net worth of the richest 10% nationwide.
Growing Financial Divide Over Time
The analysis reviewed financial assets statistics covering the recent health crisis years and found that during 2006-08, it would have needed 38 years of average worker salary to reach the top 10th of the wealth distribution.
A senior economist involved with the study stated: "Wealth gaps in Britain are now so large that a regular employee saving all their earnings throughout their career would still not be able to attain the highest level of the economic scale."
Quantifying the Economic Gap
The study found that the disparity between the wealth of the median citizen and a person belonging to the top 10% was one million pounds in the pre-crisis period, but had increased to £1.3m in inflation-adjusted terms by the pandemic years.
The analyst continued: "These gaps are especially alarming as financial progression in Britain is low – people that start life affluent tend to continue being rich, and vice versa."
Relative Wealth Inequality
Despite the economic divide growing in actual numbers, the percentage of total wealth in the UK possessed by the wealthiest families – known as "relative wealth inequality" – has been "broadly stable since the 1980s," according to the research.
Over this timeframe, total wealth in the UK rose substantially from three times the annual GDP, to approximately 7.5x.
Factors of Wealth Inequality
So-called "unearned" increases, by means of increasing property values and variations in superannuation evaluations, were the main drivers of the growing financial disparity over the past decade, per the analysis.
These appreciations generally flowed to senior citizens with real estate, the study demonstrates – exacerbating the intergenerational wealth divide.
Generational Economic Gaps
The average wealth gap between individuals aged 30-34 and people aged 60-64 increased over twofold in inflation-adjusted terms, from £135k in pre-financial crisis, to 310 thousand pounds.
Regional Variations
Additionally, there were significant area-based disparities, with the typical amount of net worth in the pandemic period standing at £290k in the SE of England, where real estate values have generally grown substantially, compared with £110k in the north-east.
Pandemic Period Effects
Amid the health crisis, when numerous employees were supported by the government-supported job retention program, and health crisis restrictions curtailed consumption options, the data shows numerous families were capable of accumulating, increasing their wealth.
Higher-income households fared much better, though. "The average household in the lowest-income quintile saw their available funds rise by merely £80 throughout the health crisis (across the pandemic timeframe), broadly the same as the pre-crisis period. Conversely, the median home in the wealthiest fifth saw their cash reserves grow by 4,200 pounds," the study reveals.
