According to recent research, the median worker in the UK would need over five decades of salary to attain the wealth level of the richest 10% of the population.
Expanding Financial Divide Over Time
The study reviewed wealth distribution statistics covering the recent health crisis years and determined that in the mid-2000s, it would have taken nearly four decades of average worker salary to reach the top 10th of the wealth distribution.
A senior economist involved with the study observed: "Wealth gaps in Britain are now so large that a regular employee accumulating their complete salary during their working years would remain unable to attain the highest level of the wealth ladder."
Assessing the Financial Disparity
The analysis discovered that the gap between the wealth of the average person and a person belonging to the richest segment was one million pounds in the mid-2000s, but had widened to £1.3m in actual value by recent times.
The researcher added: "These disparities are doubly concerning as financial progression in Britain is restricted – individuals who begin life wealthy tend to remain affluent, and the opposite holds true."
Relative Wealth Inequality
Although the financial disparity growing in absolute terms, the share of total wealth in the UK held by the wealthiest families – known as "proportional economic disparity" – has been "mostly consistent since the 1980s," according to the research.
During this period, overall assets in the UK increased dramatically from three times the yearly economic output, to nearly seven and a half times.
Factors of Financial Divide
Referred to as "passive" increases, via rising house prices and adjustments to superannuation evaluations, were the key contributors of the expanding economic divide from 2010 onward, per the study.
These gains tended to accrue to older, property-owning households, the study demonstrates – worsening the intergenerational wealth divide.
Generational Economic Gaps
The typical financial disparity between thirty-somethings and those in their early 60s increased over twofold in real terms, from £135k in 2006-08, to 310 thousand pounds.
Geographic Differences
Furthermore, the study revealed significant area-based disparities, with the average level of assets in 2020-22 amounting to £290k in south-east England, where housing costs have tended to rise rapidly, as opposed to 110 thousand pounds in the north-east.
Health Crisis Years Impact
Throughout the COVID period, when millions of workers were protected by the taxpayer-backed furlough scheme, and health crisis restrictions limited opportunities for spending, the information reveals numerous families were in a position to set aside money, increasing their wealth.
Wealthier families performed significantly better, however. "The average household in the bottom income bracket saw their liquid savings grow by only eighty pounds throughout the health crisis (2019-20 to 2021-22), broadly the same as the pre-crisis period. In contrast, the typical family in the top income bracket saw their liquid savings grow by 4,200 pounds," the report finds.
