Based on new research, the typical employee in the UK would have to work over five decades of income to achieve the financial standing of the richest 10% of the population.
Widening Economic Disparity Across Decades
The analysis reviewed net worth data covering the Covid pandemic period and discovered that in 2006-08, it would have needed 38 years' worth of median full-time earnings to reach the top 10th of the economic ladder.
A senior economist part of the study observed: "Financial divides in Britain are presently so substantial that a average worker saving all their earnings throughout their career would still not be able to achieve the peak of the wealth ladder."
Assessing the Wealth Divide
The analysis found that the gap between the assets of the average person and someone in the richest segment was £1 million in 2006-08, but had expanded to 1.3 million pounds in inflation-adjusted terms by recent times.
The analyst continued: "These differences are doubly concerning as wealth mobility in Britain is limited – people that start life wealthy tend to continue being rich, and vice versa."
Proportional Economic Disparity
Even with the wealth gap expanding in actual numbers, the percentage of overall assets in the UK owned by the most affluent homes – known as "proportional economic disparity" – has been "broadly stable since the eighties," as stated in the research.
During this period, total wealth in the UK rose substantially from three times the gross domestic product, to almost 7.5 times.
Factors of Economic Disparity
So-called "passive" increases, through increasing property values and variations in retirement fund assessments, were the primary factors of the expanding economic divide over the past decade, per the study.
These appreciations tended to accrue to older, property-owning households, the research shows – intensifying the intergenerational wealth divide.
Intergenerational Financial Divides
The average wealth gap between people in their early 30s and people aged 60-64 grew by more than 100% in inflation-adjusted terms, from £135,000 in 2006-08, to £310,000.
Geographic Differences
Additionally, there were pronounced geographic differences, with the average level of wealth in recent years reaching £290,000 in the southeastern region, where property prices have tended to rise rapidly, compared with £110k in the north-east.
Health Crisis Years Impact
Throughout the COVID period, when millions of workers were supported by the public-funded employment protection, and pandemic lockdowns curtailed consumption options, the information reveals countless homes were able to save, increasing their wealth.
Higher-income households achieved superior outcomes, though. "The median home in the bottom income bracket saw their liquid savings grow by only eighty pounds during the COVID years (from 2019 to 2022), approximately equivalent to the pre-crisis period. In contrast, the typical family in the top income bracket saw their liquid savings rise by £4,200," the report finds.
