Based on new analysis, the average employee in the UK would have to work half a century of income to attain the net worth of the richest 10% in the country.
Expanding Economic Disparity Over Time
The study reviewed net worth information including the Covid pandemic period and found that back in the pre-financial crisis era, it would have needed 38 years of median full-time earnings to enter the wealthiest decile of the wealth distribution.
A research lead associated with the study commented: "Economic disparities in Britain are currently so significant that a regular employee setting aside their entire income during their working years would continue to be incapable to attain the highest level of the economic scale."
Quantifying the Wealth Divide
The research found that the disparity between the assets of the median citizen and someone in the wealthiest decile was £1m in the pre-crisis period, but had increased to £1.3m in actual value by 2020-22.
The analyst continued: "These differences are particularly worrying as economic movement in Britain is limited – those who commence life well-off tend to stay wealthy, and vice versa."
Comparative Financial Divide
Although the economic divide growing in specific figures, the share of total wealth in the UK held by the most affluent homes – known as "proportional economic disparity" – has been "broadly stable since the 1980s era," per the analysis.
During this period, complete net worth in the UK increased dramatically from thrice the yearly economic output, to approximately 7.5x.
Factors of Wealth Inequality
So-called "automatic" increases, via increasing property values and changes in superannuation evaluations, were the main drivers of the growing financial disparity over the past decade, per the analysis.
These appreciations generally flowed to elderly homeowners, the study demonstrates – exacerbating the age-based economic gap.
Generational Economic Gaps
The typical financial disparity between thirty-somethings and sixty-somethings grew by more than 100% in inflation-adjusted terms, from 135 thousand pounds in 2006-08, to 310 thousand pounds.
Geographic Disparities
Additionally, there were significant regional variations, with the typical amount of assets in the pandemic period reaching £290,000 in south-east England, where housing costs have typically increased quickly, versus £110k in the NE of England.
Health Crisis Years Impact
Amid the health crisis, when numerous employees were protected by the public-funded employment protection, and pandemic lockdowns curtailed consumption options, the data shows many households were capable of accumulating, increasing their wealth.
More affluent homes performed significantly better, however. "The typical family in the poorest fifth saw their liquid savings increase by just £80 throughout the health crisis (2019-20 to 2021-22), roughly identical to the two years pre-pandemic. On the other hand, the typical family in the highest income quintile saw their cash reserves increase by £4,200," the study reveals.
