Based on new analysis, the typical employee in the UK would require over five decades of income to reach the wealth level of the wealthiest 10% of the population.
Growing Wealth Gap Across Decades
This research analyzed net worth data including the 2020-22 timeframe and discovered that back in 2006-08, it would have taken nearly four decades of average worker salary to enter the top 10th of the economic ladder.
A senior economist involved with the report stated: "Economic disparities in Britain are currently so significant that a average worker setting aside their entire income during their working years would still not be able to reach the top of the economic scale."
Measuring the Economic Gap
The analysis found that the difference between the wealth of the average person and a person belonging to the top 10% was one million pounds in the pre-crisis period, but had expanded to £1.3 million in inflation-adjusted terms by recent times.
The researcher added: "These gaps are especially alarming as wealth mobility in Britain is low – people that start life wealthy tend to remain affluent, and the opposite holds true."
Relative Wealth Inequality
Despite the financial disparity expanding in absolute terms, the portion of overall assets in the UK owned by the wealthiest families – known as "proportional economic disparity" – has been "mostly consistent since the 1980s," as stated in the study.
Throughout these years, overall assets in the UK surged from triple the annual GDP, to nearly seven and a half times.
Drivers of Financial Divide
Referred to as "passive" gains, through growing real estate costs and variations in retirement fund assessments, were the primary factors of the growing financial disparity since 2010, as stated in the study.
These gains generally flowed to older, property-owning households, the analysis reveals – worsening the age-based economic gap.
Generational Wealth Disparities
The average wealth gap between people in their early 30s and those in their early 60s grew by more than 100% in inflation-adjusted terms, from 135 thousand pounds in pre-financial crisis, to £310k.
Geographic Disparities
Additionally, there were significant geographic differences, with the average level of wealth in the pandemic period reaching £290k in the SE of England, where housing costs have generally grown substantially, versus 110 thousand pounds in the NE of England.
Pandemic Period Consequences
Amid the health crisis, when numerous employees were supported by the public-funded employment protection, and health crisis restrictions limited opportunities for spending, the data shows countless homes were in a position to set aside money, increasing their wealth.
More affluent homes achieved superior outcomes, nevertheless. "The median home in the poorest fifth saw their liquid savings rise by merely £80 throughout the health crisis (from 2019 to 2022), broadly the same as the two years pre-pandemic. Conversely, the median home in the highest income quintile saw their cash reserves grow by 4,200 pounds," the study reveals.
