According to new study, the median worker in the UK would need over five decades of income to attain the wealth level of the wealthiest 10% of the population.
Growing Economic Disparity Over Time
The study reviewed wealth distribution statistics from the recent health crisis years and determined that during the mid-2000s, it would have taken nearly four decades of median full-time earnings to join the wealthiest decile of the financial hierarchy.
A research lead part of the report commented: "Wealth gaps in Britain are now so large that a regular employee accumulating their complete salary across their entire working life would remain unable to reach the top of the financial hierarchy."
Measuring the Economic Gap
The study discovered that the gap between the wealth of the average person and an individual in the richest segment was £1m in the mid-2000s, but had increased to £1.3m in inflation-adjusted terms by 2020-22.
The economist continued: "These gaps are particularly worrying as economic movement in Britain is restricted – individuals who begin life affluent tend to stay wealthy, and conversely applies."
Comparative Financial Divide
Despite the economic divide expanding in actual numbers, the percentage of complete net worth in the UK owned by the most affluent homes – known as "proportional economic disparity" – has been "mostly consistent since the eighties," per the study.
Throughout these years, total wealth in the UK increased dramatically from three times the yearly economic output, to approximately 7.5x.
Drivers of Financial Divide
Termed "automatic" increases, via increasing property values and adjustments to retirement fund assessments, were the primary factors of the expanding economic divide from 2010 onward, per the study.
These gains generally flowed to senior citizens with real estate, the analysis reveals – worsening the intergenerational wealth divide.
Age-Based Economic Gaps
The typical financial disparity between individuals aged 30-34 and people aged 60-64 increased over twofold in actual value, from 135 thousand pounds in the mid-2000s, to £310,000.
Regional Disparities
Furthermore, the study revealed pronounced regional variations, with the median value of net worth in recent years amounting to £290,000 in the southeastern region, where property prices have tended to rise rapidly, versus 110 thousand pounds in the NE of England.
Pandemic Period Consequences
Amid the health crisis, when numerous employees were supported by the government-supported job retention program, and health crisis restrictions reduced expenditure possibilities, the data shows many households were in a position to set aside money, increasing their wealth.
Higher-income households performed significantly better, nevertheless. "The typical family in the poorest fifth saw their liquid savings increase by just £80 throughout the health crisis (from 2019 to 2022), roughly identical to the pre-crisis period. On the other hand, the typical family in the wealthiest fifth saw their cash reserves rise by £4,200," the analysis concludes.
