Based on fresh research, the average worker in the UK would need over five decades of salary to reach the wealth level of the most affluent 10% in the country.
Widening Wealth Gap Through the Years
This research reviewed wealth distribution data from the Covid pandemic period and determined that back in the mid-2000s, it would have taken nearly four decades of typical employment income to join the top 10th of the economic ladder.
A research lead involved with the study observed: "Wealth gaps in Britain are currently so significant that a typical full-time employee saving all their earnings across their entire working life would still not be able to reach the top of the economic scale."
Quantifying the Economic Gap
The analysis discovered that the difference between the net worth of the typical individual and someone in the richest segment was one million pounds in the mid-2000s, but had widened to £1.3m in actual value by the pandemic years.
The analyst continued: "These disparities are particularly worrying as financial progression in Britain is low – individuals who begin life affluent tend to remain affluent, and conversely applies."
Relative Wealth Inequality
Even with the financial disparity growing in absolute terms, the share of total wealth in the UK owned by the most affluent homes – termed "relative wealth inequality" – has been "broadly stable since the 1980s," as stated in the analysis.
During this period, overall assets in the UK surged from thrice the gross domestic product, to approximately 7.5x.
Drivers of Economic Disparity
So-called "unearned" increases, through growing real estate costs and changes in pension valuations, were the main drivers of the growing financial disparity over the past decade, per the analysis.
These appreciations tended to accrue to elderly homeowners, the research shows – intensifying the intergenerational wealth divide.
Age-Based Economic Gaps
The typical financial disparity between thirty-somethings and those in their early 60s more than doubled in inflation-adjusted terms, from £135k in 2006-08, to 310 thousand pounds.
Geographic Disparities
Furthermore, the study revealed significant geographic differences, with the typical amount of net worth in the pandemic period amounting to £290,000 in south-east England, where real estate values have typically increased quickly, compared with £110,000 in the north-east.
COVID Era Impact
During the pandemic, when millions of workers were supported by the taxpayer-backed furlough scheme, and health crisis restrictions curtailed consumption options, the data shows many households were able to save, increasing their wealth.
Wealthier families performed significantly better, though. "The median home in the bottom income bracket saw their cash reserves increase by just £80 during the COVID years (from 2019 to 2022), broadly the same as the pre-crisis period. Conversely, the median home in the wealthiest fifth saw their available funds grow by 4,200 pounds," the report finds.
