Based on new analysis, the typical employee in the UK would have to work over five decades of salary to attain the net worth of the wealthiest 10% nationwide.
Expanding Wealth Gap Through the Years
The analysis examined financial assets statistics from the 2020-22 timeframe and determined that during the mid-2000s, it would have required 38 years of typical employment income to reach the richest segment of the financial hierarchy.
A senior economist involved with the study stated: "Economic disparities in Britain are presently so substantial that a typical full-time employee saving all their earnings during their working years would remain unable to attain the highest level of the economic scale."
Quantifying the Wealth Divide
The study found that the difference between the wealth of the average person and an individual in the top 10% was £1 million in the pre-crisis period, but had increased to 1.3 million pounds in inflation-adjusted terms by the pandemic years.
The economist continued: "These disparities are particularly worrying as financial progression in Britain is low – those who commence life well-off tend to remain affluent, and the opposite holds true."
Proportional Economic Disparity
Even with the financial disparity growing in specific figures, the share of total wealth in the UK possessed by the most affluent homes – called "proportional economic disparity" – has been "broadly stable since the 1980s era," according to the analysis.
During this period, overall assets in the UK surged from triple the gross domestic product, to approximately 7.5x.
Drivers of Wealth Inequality
So-called "automatic" increases, through growing real estate costs and changes in retirement fund assessments, were the primary factors of the expanding economic divide from 2010 onward, per the report.
These increases generally flowed to older, property-owning households, the research shows – worsening the generational financial disparity.
Intergenerational Wealth Disparities
The average wealth gap between individuals aged 30-34 and sixty-somethings more than doubled in inflation-adjusted terms, from 135 thousand pounds in pre-financial crisis, to £310k.
Area-Based Differences
Additionally, there were pronounced geographic differences, with the typical amount of wealth in the pandemic period standing at £290k in the SE of England, where housing costs have tended to rise rapidly, compared with £110k in the northeastern region.
COVID Era Effects
During the pandemic, when millions of workers were covered under the government-supported job retention program, and health crisis restrictions reduced expenditure possibilities, the data shows numerous families were capable of accumulating, enhancing their financial standing.
Wealthier families fared much better, however. "The typical family in the poorest fifth saw their available funds rise by merely £80 during the COVID years (2019-20 to 2021-22), broadly the same as the pre-crisis period. Conversely, the median home in the top income bracket saw their cash reserves rise by £4,200," the analysis concludes.
