Based on new analysis, the median earner in the UK would need over five decades of income to achieve the financial standing of the most affluent 10% nationwide.
Growing Economic Disparity Across Decades
The analysis examined wealth distribution statistics covering the recent health crisis years and found that back in the pre-financial crisis era, it would have taken nearly four decades of typical employment income to join the richest segment of the financial hierarchy.
A research lead involved with the study commented: "Financial divides in Britain are now so large that a regular employee setting aside their entire income throughout their career would continue to be incapable to achieve the peak of the economic scale."
Quantifying the Wealth Divide
The study found that the difference between the assets of the average person and someone in the top 10% was £1m in the pre-crisis period, but had increased to £1.3m in actual value by the pandemic years.
The researcher further stated: "These differences are especially alarming as economic movement in Britain is restricted – people that start life affluent tend to continue being rich, and the opposite holds true."
Proportional Economic Disparity
Even with the wealth gap expanding in actual numbers, the percentage of complete net worth in the UK held by the most affluent homes – termed "relative wealth inequality" – has been "mostly consistent since the 1980s," according to the analysis.
Throughout these years, total wealth in the UK rose substantially from thrice the annual GDP, to almost 7.5 times.
Drivers of Wealth Inequality
So-called "passive" increases, via growing real estate costs and variations in retirement fund assessments, were the key contributors of the expanding economic divide over the past decade, according to the report.
These increases typically went to older, property-owning households, the study demonstrates – exacerbating the intergenerational wealth divide.
Age-Based Financial Divides
The typical financial disparity between people in their early 30s and people aged 60-64 increased over twofold in inflation-adjusted terms, from £135,000 in pre-financial crisis, to 310 thousand pounds.
Regional Disparities
Furthermore, the study revealed pronounced regional variations, with the typical amount of net worth in recent years reaching £290k in the SE of England, where property prices have generally grown substantially, as opposed to 110 thousand pounds in the northeastern region.
COVID Era Impact
Amid the health crisis, when millions of workers were covered under the taxpayer-backed furlough scheme, and Covid shutdowns limited opportunities for spending, the information reveals countless homes were capable of accumulating, increasing their wealth.
More affluent homes fared much better, though. "The average household in the lowest-income quintile saw their liquid savings rise by merely £80 throughout the health crisis (from 2019 to 2022), roughly identical to the 24 months before COVID. Conversely, the typical family in the highest income quintile saw their liquid savings increase by £4,200," the study reveals.
