Based on recent analysis, the average earner in the UK would need over five decades of salary to achieve the wealth level of the most affluent 10% of the population.
Widening Financial Divide Through the Years
The analysis analyzed wealth distribution information from the Covid pandemic period and found that in the mid-2000s, it would have required 38 years' worth of typical employment income to reach the richest segment of the economic ladder.
A research lead involved with the analysis commented: "Economic disparities in Britain are now so large that a average worker saving all their earnings across their entire working life would still not be able to achieve the peak of the financial hierarchy."
Measuring the Financial Disparity
The study revealed that the disparity between the assets of the typical individual and an individual in the wealthiest decile was £1m in 2006-08, but had increased to £1.3m in inflation-adjusted terms by 2020-22.
The researcher continued: "These differences are doubly concerning as economic movement in Britain is restricted – people that start life affluent tend to remain affluent, and conversely applies."
Comparative Financial Divide
Despite the wealth gap growing in absolute terms, the percentage of overall assets in the UK held by the most affluent homes – called "relative wealth inequality" – has been "broadly stable since the eighties," per the study.
Over this timeframe, complete net worth in the UK increased dramatically from thrice the gross domestic product, to approximately 7.5x.
Factors of Economic Disparity
So-called "unearned" gains, by means of increasing property values and adjustments to superannuation evaluations, were the key contributors of the growing financial disparity over the past decade, according to the study.
These gains tended to accrue to older, property-owning households, the analysis reveals – exacerbating the age-based economic gap.
Age-Based Economic Gaps
The typical financial disparity between thirty-somethings and people aged 60-64 more than doubled in inflation-adjusted terms, from £135k in 2006-08, to £310,000.
Regional Disparities
Furthermore, the study revealed pronounced regional variations, with the average level of wealth in 2020-22 standing at £290,000 in the SE of England, where property prices have generally grown substantially, versus 110 thousand pounds in the NE of England.
COVID Era Consequences
Amid the health crisis, when millions of workers were supported by the taxpayer-backed furlough scheme, and pandemic lockdowns curtailed consumption options, the data shows countless homes were able to save, enhancing their financial standing.
Wealthier families fared much better, however. "The average household in the bottom income bracket saw their liquid savings grow by only eighty pounds over the pandemic period (2019-20 to 2021-22), roughly identical to the pre-crisis period. Conversely, the median home in the wealthiest fifth saw their liquid savings rise by £4,200," the report finds.
