Per recent research, the typical worker in the UK would need over five decades of income to attain the financial standing of the richest 10% nationwide.
Expanding Financial Divide Over Time
This research reviewed financial assets data covering the Covid pandemic period and determined that during 2006-08, it would have required nearly four decades of typical employment income to reach the top 10th of the financial hierarchy.
A senior economist involved with the report stated: "Financial divides in Britain are presently so substantial that a typical full-time employee saving all their earnings across their entire working life would remain unable to reach the top of the wealth ladder."
Measuring the Wealth Divide
The analysis revealed that the gap between the wealth of the average person and a person belonging to the top 10% was one million pounds in the mid-2000s, but had increased to £1.3m in inflation-adjusted terms by recent times.
The researcher added: "These disparities are doubly concerning as financial progression in Britain is limited – individuals who begin life wealthy tend to remain affluent, and conversely applies."
Relative Wealth Inequality
Even with the economic divide growing in actual numbers, the share of complete net worth in the UK possessed by the richest households – known as "relative wealth inequality" – has been "largely unchanged since the 1980s," according to the analysis.
Over this timeframe, complete net worth in the UK increased dramatically from three times the gross domestic product, to approximately 7.5x.
Drivers of Economic Disparity
Termed "unearned" increases, through rising house prices and changes in retirement fund assessments, were the primary factors of the widening wealth gap from 2010 onward, per the analysis.
These gains generally flowed to senior citizens with real estate, the research shows – exacerbating the age-based economic gap.
Generational Economic Gaps
The typical financial disparity between people in their early 30s and those in their early 60s more than doubled in inflation-adjusted terms, from £135k in pre-financial crisis, to £310k.
Area-Based Differences
Furthermore, the study revealed stark area-based disparities, with the median value of net worth in recent years reaching £290k in south-east England, where housing costs have generally grown substantially, compared with £110k in the NE of England.
Pandemic Period Impact
During the pandemic, when millions of workers were protected by the government-supported job retention program, and health crisis restrictions curtailed consumption options, the information reveals many households were able to save, enhancing their financial standing.
Wealthier families fared much better, nevertheless. "The median home in the lowest-income quintile saw their cash reserves grow by only eighty pounds during the COVID years (across the pandemic timeframe), broadly the same as the 24 months before COVID. In contrast, the typical family in the highest income quintile saw their cash reserves increase by £4,200," the analysis concludes.
